Take Our Survey: How Do You Stay Informed and Connected?

Several years ago, Specific Software conducted a survey about favorite online sources of insurance and risk management news and information. The survey garnered some media attention in the industry and was useful to us internally as we developed marketing and publicity plans.

You can now follow WorkCompEdge on Twitter!

But that was a few years ago! With the growth of both content and "2.0" applications on the web, we've decided it's time to resurrect the survey, with a few new questions geared towards not just information, but how you stay connected with colleagues and clients.

Whether you're an insurance or risk management professional or a business insurance consumer, please take our survey "How Do You Stay Informed and Connected?" now.

While I'm on the topic of staying connected, this is a good time to mention that you can now follow WorkCompEdge on Twitter. I'm trying to tweet at least once a day with some sort of information about workers comp, general insurance and risk management, general business or technology news, or news about Specific Software and SIGMA Actuarial that I hope others may find interesting.

You can use Twitter for free simply through the Twitter website - using your cell phone is optional. I've found that starting just by using the web interface is a good, low-impact way to try it out.

In general, the insurance industry doesn't seem to be embracing social media as quickly as other industries. But numerous activities, such as the recent AMS Users' Group Social Media Road Trip, Insurance Journal's promotion of social media webinars, and consultant Rick Morgan's blog entry "Insurance Agents Don't Market," suggests that we are on the cusp of change when it comes to how we connect with each other and our clients.

We'd love to hear your thoughts in our survey - and in the blog comments!

How Will New NCCI Ratemaking Rules Affect Workers Comp Mods?

It's a bit confusing to understand the likely impact of the new NCCI ratemaking change. But businesses, such as contractors, which are required to have a mod of 1.0 (or other value) in order to bid on jobs will want to be especially careful to anticipate this change and minimize any losses that do occur through good injury management and claims management efforts.

View the full blog at http://www.workcompedge.com/blog/blog.cfm

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Looking for Trouble: Finding and Correcting Mod Errors

View the full blog at http://www.workcompedge.com/blog/blog.cfm

Today's blog will be most useful to insurance agencies who are assisting their clients with experience mod verification and analysis, but the main point is important to agents and employers alike: sometimes errors in the mod occur, and these errors can cost the employer money through increased premium costs. Therefore it's important to go "looking for trouble:" to know how to identify such errors, and how to get them corrected.

Both data reporting and, less frequently, calculation errors can impact the mod - and the amount of premium that an employer must pay. Checking for and questioning such errors can save an employer money!

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Why Invest in Safety?

Listen/subscribe to this blog on the WorkCompEdge podcast feed

Editor's note: I recently joined the Small Business Online Community sponsored by Bank of America. Among several interesting articles there, I was thrilled to find a safety guy talking about the workers comp mod. Robert F. Tilley, Jr. is the CEO of SafeTek USA, a company that provides knowledge, supplies, products and services to North American organizations ranging from small residential builders to the US Navy. SafeTek's vision - "to help create safe and healthful workplaces, where quality is higher, mistakes are fewer, and costs are lower" - is quite similar to the mission of WorkCompEdge, and Robert's article certainly has some points that should sound familiar to our regular readers. But he also brings the perspective of a safety professional and the business owners his company serves - along with some interesting statistics. The following article may give your company's management, or your clients, some new food for thought.


At a recent speaking engagement for business owners addressing how to implement effective safety programs, I had a question from a member of the audience-we'll call him Bob. Bob asked why he should invest in safety. He told me he has insurance if an employee gets injured, he has a safety manual, OSHA has never bothered him and the only employee injuries so far have been minor. Why should he do more if what he's doing now is working?
"Well Bob," I said. "How much will it cost your business if an employee falls from a roof, and how much have those ‘minor injuries' cost you so far?" Needless to say, Bob, and everyone else in the audience that day, were quite surprised as we revealed the actual costs of workplace injuries to their businesses. Unfortunately, the only thing most employers are aware of is that they have to spend money to have an effective safety program, and that's where the train stops. Successful companies, however, maintain very effective safety programs and pay the expenses involved even when business is slow and times are tough.
Most employers maintain some semblance of a safety program at their company, either because they care about their employees or because they're required to by OSHA. OSHA violations can range anywhere from just a warning, to $70,000 per incident with recent proposed legislation asking to raise fines even further into the range of EPA violations. I would like to think that all employers care about their employees, but often profits come first. What does that mean? It means one thing is certain-all employers care about their company because of the profits derived from it. A for-profit business is created to make a profit 99.9 percent of the time. You carry insurance to protect yourself and your business, you plan ahead to avoid unforeseen costs and cut expenses where they are not needed to ensure you are as competitive as possible while maintaining a good profit margin.
Unfortunately, however, the cost of effective safety measures are all too often deemed an "unnecessary" expense. When business is slow, what is the first expense to get to get cut? You already know: the safety program. Normally the responsibility gets transferred to the HR manager, and training and other expenses are cut, which could really lead to disaster, especially for the new employee you just hired. If you are not motivated to have an effective safety program by either OSHA, the threat of fines or care for your employees, one thing that will motivate you is the actual cost of a workplace injury to your business. So how much does it cost?
Statistics and Costs
Every year in the United States there are over 6,000 workplace fatalities. The greatest majority of these fatalities are men ages twenty-five to forty-four, of which there are approximately 30 million in the United States. That means, using this example, just over 1 in every 6,000 men aged twenty-five to forty-four dies at work each year.
Even with these staggering numbers, this does not include deaths related to occupational illness. Another 50,000 workers die every year in the United States from occupational illnesses due to exposure to a workplace hazard. These occupational illnesses include asbestosis caused by exposure to asbestos, silicosis which can be acquired from concrete cutting operations (and any work involving exposure to crystalline silica dust if not using proper respiratory protection) black lung disease for miners, or brown lung disease for textile workers, etc. (Just an FYI, though not usually fatal, poison ivy is an OSHA reportable illness.)
In addition to deaths, there are over 6 million U.S. workers that suffer non-fatal workplace injuries with an estimated cost to U.S. businesses of around $128 billion annually. A person's life or health is obviously priceless, but incidents and injuries carry a tangible cost to business, one quarter of each dollar of pre-tax corporate profits, to be exact.
The actual cost of a workplace accident or illness to your organization depends on a few different things. Costs depend on how many employees you have, how many incidents you have, the type of work you do and the value of your materials, products or services. For companies that may be experiencing a tough time financially, any losses are serious. Even for a large employer, losing an employee on a job who is skilled in their trade, for even a few days, can have a much larger impact on profits than the actual direct costs might suggest. With smaller businesses this would be magnified because they often have very little buffer when it comes to accidental losses. A serious incident could not just make it difficult to get by, but put them out of business. In fact, according to a recent study, 60 percent of companies experiencing a serious disruption that lasted more than nine days went out of business.
"But Wait, What about My Insurance? Isn't My Business Covered?"
Insurance only covers what is detailed in the policy, and it usually only pays for serious injuries or damage. Workers' compensation does cover all employee injuries, but you will end up paying for the cost of that injury and more-we'll get into that later. Some of the costs that are not covered by insurance include lost time, sick pay, damage or loss of product and materials, lost time and failure to keep schedule, extra wages for overtime and temporary labor, investigation time and expenses, OSHA fines, loss of contracts, legal costs and loss of company reputation, to name a few.
The uninsured costs differ between businesses, the type of work being done, insurance and type injury. No matter how you look at it, though, the uninsured costs are many times greater than the insured costs. If your business is a ship, costs are like an iceberg. Most of the costs are hidden beneath the surface and are not immediately visible, but you feel it when you run into them. Studies have shown that the insurance premium to uninsured cost ratios for the construction industry generally range from 1:9 to 1:41. That means that for every $1 paid in insurance premiums, the company has to pay an additional $9 to $41 themselves for losses arising from incidents. Another way to look at it-uninsurable expenses often run up to as much as 4 times more than the actual costs covered by insurance.
Workers' Compensation Insurance
It may surprise even the financially savvy how much you can save on your insurance by being safe. A poor claims record will affect the amount a company pays in insurance premiums. Depending on the number of incidents a company may have, insurance premiums can increase, and coverage may even be cancelled. Insurance companies set a base rate for a particular industry, and the number of incidents you have directly affects how much you pay as your base rate. This is called an experience modifier. Your workers' compensation insurance premium is determined by this easy formula:
Payroll x Workers' Compensation Rate x Experience Modifier
Workers' compensation rates reflect the average claim cost per $100 of payroll. Workers' compensation rates can take a huge chunk out of your profits if you are not safe. The average worker's compensation rate for construction is 7 to 8 percent of your payroll, but can be lower for executives, around 2 percent, or 25 percent for more high risk activities. According to the U.S. Census Bureau, construction claims comprise around 21 percent of the total claims for all industries. This is quite a large number considering that only 5.7 percent of the U.S. workforce is in the construction industry.
An experience modifier of 1.0 means your company's workers' compensation claims experience is no better or worse than your industry. If you have a lower experience modifier, you pay less.
For example, if your business had a 1.47 experience modifier because of increased incidents and injuries and paid $85,958 in premiums, but reorganized, got serious about safety, and got down to a .82 experience modifier, your business would only be paying $47,950. That is almost a $40,000 savings. That $40,000 with a 9 percent profit margin equates to approximately $445,000 in new business each year!
There are other savings to be had. Many businesses find that by improving workplace safety and health standards, their investments are repaid by improved productivity and efficiency, less employee absence, good company reputation, less turnover and improved quality of work. Tackling the causes of incidents and injuries is not unnecessary overhead, but an investment in your business. An investment in an effective health and safety program is as valuable as any other for your company. The American Society of Safety Engineers found in a recent study that for every dollar spent on a quality safety and health program, businesses saved $8. That's a healthy return on investment.
An investment into an effective safety and health program for your business is just that, an investment. Not only is it unethical to risk an employee's health or safety to save money and cut costs, but in reality, it does just the opposite. It creates unnecessary risks, costs and headaches. A safe company with limited incidents and injuries will not only have an increased profit margin, but will be more appealing to potential clients and good employees. Successful businesses plan for the future, for growth and for potential risks. Safety should play a key role in your strategy and is the reason long-term successful businesses invest so much into their safety and health programs, because as I am sure some of you know, gambling isn't a good long term, or short term investment. Play it safe with safety. You may skimp by for a while, but the house always wins.

Listen/subscribe to this blog on the WorkCompEdge podcast feed

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If you are not motivated to have an effective safety program by either OSHA, the threat of fines or care for your employees, one thing that will motivate you is the actual cost of a workplace injury to your business.

Member Agencies Talk About WorkCompEdge

Maybe you're in an agency that's considering WorkCompEdge. Or maybe you're already an agency member. Integrating WorkCompEdge into your sales and service processes is admittedly a task that takes some thought and - that dreaded word - change. WorkCompEdge member Garry Watts of the Winona Agency acknowledges it isn't easy. "I'm a producer," he says, "and we don't think 'process-oriented.'" But, in a new audio interview available here on our corporate website and as a podcast feed, Garry also goes on to offer encouragement for - and his experience with - implementing WorkCompEdge.

Today's blog marks the first time we've published the blog as a podcast. Would you like all WorkCompEdge blog entries delivered as a podcast? Let us know!

"WorkCompEdge seemed to be a missing link for us," he says. "We think the return on investment is very high."

WorkCompEdge contributor Frank Pennachio, another agency owner and work comp trainer, also lends his thoughts on how WorkCompEdge helps agents lead and engage employers and how various work comp training programs integrate with WorkCompEdge.

(For our Member Agencies, Frank and Garry will be continuing this discussion in more depth in a web-enabled roundtable discussion in July - watch your inbox for more details.)

Thanks to Jack Burke, president of Sound Marketing and host of the popular insurance programs "Audio Insurance Outlook" and "Insurance Talk Radio," for conducting the interview.

For you podcast subscribers out there, this blog marks the first time we've pushed audio to a podcast feed. Be sure to subscribe, and let us know if you'd like all blogs available as a podcast! It won't always be Jack's professional voice, but we're willing to give it a try if the interest is there!

Play the audio interview now

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WorkCompEdge Interview with Garry Watts and Frank Pennachio

Jack Burke, president of Sound Marketing and host of the popular insurance programs "Audio Insurance Outlook" and "Insurance Talk Radio," interviews WorkCompEdge member agents Garry Watts of the Winona Agency and Frank Pennachio of WorkComp Partners about the challenges and benefits of integrating WorkCompEdge into their agency processes.

http://www.specificsoftware.com/
http://www.workcompedge.com/

Virtual Conference on Return to Work Now in Progress

Workers compensation consultant, writer and trainer Margaret Spence of Douglas Claims and Risk Consultants has founded National Return to Work Week and is observing it now (May 11-15, 2009) for the first time with a free virtual conference. Here are a few of the seminar topics coming up in the remainder of the week:

• Physician Where Art Thou - Medical Management
• Best Practices - Workers Compensation and Beyond - From a Defense Attorney’s Point of View
• I'm Injured and I Can't Come Back to Work
• Engaging Employees With Disabilities - Getting Them Back to Work

No packing needed - attend the inaugural conference for "National Return to Work Week" virtually. And free! And even after it's over!

"Kory," you might say, "it's a whole week of free events. And this is Wednesday afternoon. Why didn't you tell me about this sooner?"

"Well," I would say sheepishly, "that might have something to do with me not opening every email I receive in the most timely manner. Not yours, of course."

But all is not lost! The seminars we've missed are recorded and also available. These include:

• Disability is a Daunting Task - Right?


• The Flip Side: Attorneys and Return to Work


• Vocational Retraining: a Viable Return to Work Option

and many more. Speakers include attorneys, an ergonomics specialist, a medical doctor, human resource professionals, Ms. Spence, WorkCompEdge contributor Frank Pennachio, and others.

Visit www.brighttalk.com/summit/nationalreturntoworkweek to view in-progress, upcoming, and recorded sessions. Registration is free and easy. I had a little trouble the first time I tried to view one of the seminars (my browswer bombed), but on my subsequent attempt, everything worked fine.

This initiative mirrors many of the principles we advocate in WorkCompEdge, and we congratulate Ms. Spence on her leadership and vision.

http://www.WorkCompEdge.com
http://www.SpecificSoftware.com