Archive for : December, 2019

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Texas Workers’ Compensation Insurance: Know the Numbers You Can Influence

As a CEO, CFO, or risk manager in Texas, you need to know whether you are the beneficiary or victim of your Workers’ Compensation underwriter’s caprice. Workers’ Comp Insurance is unique among lines of property and casualty insurance in that the pricing mechanisms are clearly defined. The majority of standard market casualty (e.g., general liability) writers in Texas have non-filed “Lloyds” companies in which an underwriter can use unbridled discretion when pricing a risk, but Workers’ Comp writers must use specific pricing tools and constraints that ultimately decide the price of your insurance coverage. By asking the following three questions while reviewing your policy, you can determine if there is room for improvement.

What filed company am I in and what is the rate deviation? Each insurer has several different underwriting companies which they file with the state in order to get maximum flexibility when pricing a risk. For example, within the Liberty Mutual ecosystem, you will find such companies as West American Insurance Company, American Fire and Casualty, America First Lloyds, and the Netherlands Insurance Company – just to name a few. Each company has its own rate deviation (e.g., 1.2, 1.0, .8, .6) and can be considered either preferred (credit) or penal (debit). For example, the variance in premium could range from $120,000 to $60,000 simply based on the underwriting company selected.

The underwriting company for your specific organization was selected under two possible models: (1) A computer program used an “if A then B” algorithm based on underwriting metrics (e.g., total payroll, losses, SIC code, experience modifier); or, (2) a human mammal deliberately selected a company based on their perception of the risk characteristics of your organization. Both methods are imperfect, but that discussion is outside the scope of this article.

Find out which company your organization is underwritten in and where that company ranks along the insurer’s spectrum of companies. Getting into the preferred underwriting company is a good first step in managing your Workers’ Comp premium. The specific loss characteristics of your company may preclude you from the most preferred company. However, policies are often arbitrarily placed in companies they don’t belong and this will usually continue into perpetuity unless there is intervention on your part.

What amount of scheduled credits has the insurer applied? In Texas, underwriters can apply up to 40% of scheduled credits to a Workers’ Comp policy, and these credits are stratified into specific buckets. For example, 10% may be available for workplace safety, or perhaps 5% may be credited for management’s attitude toward risk management. It is important that you review the rating worksheets to see the specific scheduled credits that have been applied to your premium.

As a former Workers’ Comp underwriter with a standard carrier, I can say that underwriters often find creative ways to justify these discretionary credits in the absence of details. Hints of alchemy and relativism creep into the process. How can one accurately quantify management’s attitude toward safety? It certainly cannot be done with the information available to an insurance company.

When an underwriter has a 24-hour deadline to document a file, there is a tendency to suddenly recall details about an account. It is also important to note that after a policy is written, there is a period of time before issuance and auditing of the file. It is during this interim that underwriters often pad the file with all sorts of details about why the credits were applied. This is the insurance industry’s version of historical fiction.

Are we in or out of the Texas Workers’ Comp Healthcare Network? I have mixed feelings about the Texas Workers’ Comp Healthcare Network, but one thing that must be praised is the tremendous savings for employers. The typical discount is approximately 10%, which translates to tens of thousands of dollars depending on the size of the employer. Travelers Insurance currently offers a 12% discount for selecting “in-network” care, which is one of the highest percentage savings available.

There is a fine balance between the benefit the employer receives from the dollars saved and the injured employee’s care and satisfaction with care. The 2011 Workers’ Compensation Network Report Card shows that, overall, network injured employees report “lower levels of access to…and satisfaction with care.” Employers must make informed decisions based on company culture, attitude toward employees, the frequency/likelihood of claims, and the potential alternative uses for the dollars saved by joining the network.

Another important trade off to consider is the time spent dealing with an injured employee who is not receiving (or perceives to not be receiving) prompt and appropriate care. When considering the time drain one of these scenarios can have on a risk manager or human resource professional, there is virtually no difference between the injured worker’s perception of care and the actual care being rendered. A common scenario involves an injured worker wanting to see a specific physician outside of the network, and then feeling that the in-network provider is rendering sub-standard care. I have seen this situation play out several times and can attest to the hours, agony, and stress a supervisor or owner endures in their effort to help the injured employee.

Final Thought. Purchasing Workers’ Comp insurance is simply a transaction. It is a way to trade dollars with an insurance company who agrees to coordinate the care for your injured employees. It is also a way to shield your organization from negligence-related suits by offering a “no-fault” remedy to injured workers. However, there are numerous benefits to be reaped by your organization if you create a safe workplace free of injuries.

I encourage you to read the story of how Paul O’Neil transformed Alcoa by taking a singular approach to improving workplace safety ( story here). At your next insurance stewardship meeting, don’t be afraid to ask questions and be sure to understand these factors to ensure the best coverage for your company and your employees.

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How to Find Affordable Health Insurance If You Are Unemployed?

Being unemployed and does not just mean losing a steady paycheck. It also means that you are unable to capitalize on many of the accessory benefits that your employer may have provided. Of these, the most important is health-insurance. While you may be able to get by being unemployed for at least some time, once you start to need visits to a doctor, or even worse, a visit to the hospital, you will quickly realize that health insurance is an important benefit that is difficult to live without.

Doctors, are very expensive, and what the average hospital visit totaling around $3000, it can place a tight burden on you and your family. If you are unemployed there are a few options you can research to see about getting affordable health insurance for you and your family.

For many transitioning professionals, COBRA is a perfect option. By law, employers are required to extend previous health benefits for a period of time after employment. This coverage, often lasting up to a year after employment can be the perfect solution for someone who is not in need of long-term care. However, COBRA costs are expensive and if you are unemployed, may be a cost that you cannot afford. Fifth the best way to determine if you are eligible for this type of insurance is to contact your employers HR or benefits department and have them take you through the required process.

You can also shop around for insurance rates online. The Better Business Bureau can provide you with a list of trustworthy Internet sites that will compare different types of coverage. By speaking with one of the companies, they can provide you with the best rates and coverage particular to your needs. If you have a family, health insurance and necessity that cannot be overlooked. By using one of these free services, you have thousands of different health insurance options at your disposal.

Being without health insurance can be a nightmare, especially if you don’t have a job. Health insurance costs these days are just too expensive to afford otherwise. Doctors and hospitals are often unwilling to reduce costs or provide adequate payment plans for uninsured individuals. Fortunately, there are ways to find affordable coverage providers to keep your family safe through a short or long term.

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Basics of Health Insurance

Medical care is essential to living a comfortable and fulfilling life. Unfortunately, today’s medical care is associated with high health care costs, complex plans and information that changes rapidly. Health insurance to most individuals and families is absolutely essential. Even being hospitalized for a few days can cost thousands of dollars and in many cases can make many uninsured individuals debt ridden or bankrupt. Whether you are healthy or ill, health insurance is seen as essential in today’s society.

Two General types of Health Insurance

There are two general types of health insurance coverage, they are; Managed Care and Fee for Service.

Managed Care

Managed care is extremely popular in the United States today and more than 50% of those with health care coverage belong to a managed care plan. There are many types of managed care plans and some include HMO’s (health maintenance organizations), PPO (preferred provider organizations) and POS plans (point of service). The main theme with managed care health insurance is that these plans provide comprehensive health services and in many situations can give financial incentives (lower premiums) for those subscribers that use specific providers (doctors) in the plan.

Fee for Service

Fee for service plans usually require that a fee is paid each time a patient sees a doctor, hospital or health care provider. Patients usually have more control on whom and where they see their health care providers and the providers receives a payment when a claim is filed by either the patient or health care provider.

For the most part, health care insurance plans are offered by an employer. Usually an employer offers the benefit of health care insurance to it’s employees for a lower cost than if the employee would have to purchase individual care. Premiums are usually collected each pay check from the employee. Most health care insurance plans offered at work can cover the individual along with a spouse and family.

If you are self employed and own your own business, you can usually apply for health insurance from major health insurance organizations. While prices are usually higher for individual coverage, many times, your business can write it off as a tax deduction (check with your account).

In addition, health care plans can include other types of care such as dental, vision, prescription drug coverage and even fitness membership coverage or rehab coverage.