Workplace injuries happen. That's why all 50 states haveworkers' comp bureaus to deal with broken bones, lacerations, andother on-the-job mishaps. Each state has its own set of workers'comp guidelines, rules, and regulations-and each has a differentfee schedule that often changes month to month. That makescompliance a major issue for carriers.

In the past, the injured would report the incident-then thefirst report of injury would be drafted. Other internalprocesses-which vary from carrier to carrier-were executed to getthe claim in motion, and ultimately forwarded to the state. And thewhole affair was written on paper or typed out in templates, atbest. Before the advent of workers' comp software solutions, thefax machine was the greatest technical advance in the field.

Not surprisingly, a lot of software options have popped up todeal with general policy management and workers' comp-specifictasks. But before you break out the corporate charge card, knowthere are some differences between the two.

Microsoft Word has some built-in spreadsheet capabilities. Butyou know that Excel is made for developing spreadsheets. The samegoes for generic policy managers and specific workers' compsolutions. While workers' comp functions might be a part of yourcompany's policy management solution, workers' comp packages areusually more fit to handle dynamic aspects of workers'comp-specifically, compliance.

“I don't know of a policy management system that could replace afull-featured claims system, or vice-versa,” said Steve Schmutz,president of MountainView Software. “If your software isn'tworkers' comp-specific, you can't have compliance with all 50states.”

“It takes a lot of attention to detail to guarantee compliance,”said HNC Software president Sean Downs. As states change their feeschedules, HNC keeps customers current by sending out monthlyupdates to its products by CD-ROM or over the Web. “We want toensure that our customers get the right claims to the rightresources at the right time, and foster a more efficientenvironment for routine claims,” he said.

HNC's new ally, ISO, got in the game “for a more completesolution for reporting needs,” according to Richard Della Rocca,ISO's assistant vice president for marketing. ISO deals with thestatistical-data reporting side of workers' comp-an aspect CaroleBanfield, executive vice president of government relations and datamanagement, admits is not usually involved with basic businesspractices.

But Banfield is willing to give her two cents: “Consolidation ofservices should provide cost efficiency to the customer. There'smuch more standardization in workers' comp, which lends itself toeconomy of scale.”
Consider the size of your business when shopping around. Chancesare, if you operate a small shop, you can use the all-in-one policymanager already in place and update your system to meet stateexpectations as they change. But larger companies might benefitmore from specific solutions that offer automated updates and fileexports, as these features are becoming increasingly popular.

Trends

Smaller businesses tend to respond more positively to workers'comp technology that operates over the Internet or as an ASP model,according to Bruce Coates, vice president of marketing and R&Dat Westport Insurance. A wholly-owned subsidiary of EmployersReinsurance, Westport recently acquired and reactivated CyberComp,an online system that quotes and binds workers' comp policies.

Coates said the small business segment works best with theInternet version of CyberComp because of its ease of use; smallbusinesses are spared the sometimes expensive and time-consumingtask of installing, configuring, customizing, and maintainingclient-hosted solutions. In the online model, CyberComp handles allof these aspects. “The more we can digitize the process, thebetter,” he said.

Along similar lines, MountainView Software's Worker's Companionhas 95 percent of its functionality mirrored in its ASP model.(Missing are financial tracking and the ability to create ad-hocreports.) Instead of paying a flat fee for software licensing,customers instead pay per transaction.

Schmutz said trends in workers' comp solutions are leaningtoward using the Internet as a collection tool. At the MountainViewSoftware-related Web site ifroi.com (“Internet First Report ofInjury,” of course), users can enter specifics from claims, afterwhich the Net-based application will take the customer informationand automatically send it to the appropriate place based on thetypes of information gathered-similar to ZIP codes with four-digitsorting numbers.

As technology and customer satisfaction make leaps and bounds,Downs hopes for overall cost control. He said there's increasingpressure to lower costs of administering claims in the workers'comp industry. And he's noticed a balancing act between keepinglosses low and administrative spending. “Companies are looking toreduce administrative burdens of handling workers' comp claimswithout losing the effectiveness of maintaining costs,” hesaid.

HNC Software focuses on e-reporting with its AC-Web and SC-Webproducts (Admin Connect Web and State Connect Web). By making theentire workers' comp process electronic-and keeping it thatway-Downs thinks collectible info becomes more plentiful, and dataare expanded and analyzed more effectively. “More states areadopting e-reporting, and they're upgrading their systems to handlethis,” he said. “With the enablement of e-reporting, more valuabledata can be added.” (For perspective, 17 states use HNC solutionsfor e-reporting.)

While trends such as ASPs haven't hit the statistical datareporting side of workers' comp, ISO feels confident it'll staycompetitive because it's an outsourcing solution. “Our workers'comp data reporting service could be an ASP,” said Della Rocca,“but instead of software for sale, this is an entire process. TheASP concept fluctuates with the NASDAQ.”

But, ISO's service is alive and kicking. After all, Banfieldsaid, ISO's genesis is statistics and data handling. ISO claims itsdata reporting capabilities fulfill much sought after reductions inoperating costs, time spent updating systems to meet changing datarequirements, and processing burdens. “We pick up data already onthe books. We track information on a policy once it's been issued,”Banfield said. “That's a value-add.”

Features and Functionality

MountainView's Worker's Companion helps companies complete andfile the first report of injury, OSHA 200 reports, and featuresautomated e-mail functions and EDI.

If your injury report is OSHA-worthy, Worker's Companion canautomatically create log reports. “Before software, people keptthis type of information on paper,” Schmutz said. “Recalculatingloss time for OSHA logs often took three weeks per report. Now, asyou enter data [into Worker's Companion] an OSHA log is built atthe same time.”

But unlike your spouse or auto mechanic, Worker's Companion willnot make decisions for you. You alone must judge whether or not thecase should be reported to OSHA. If it is, Worker's Companion canproduce a compliant report.

Schmutz said the software follows the IAIABC (InternationalAssociation of Industrial Accident Boards and Commissions-itdevelops standards for e-reporting) format for EDI, and it can bemodified for any organization's needs. “IAIABC is the mostrequested format,” he explained. “Ninety percent of all other EDIformats are offshoots of IAIABC's. Other requested functions areusually add-ons to IAIABC standards.”

With its built in graph and chart feature, companies can useWorker's Companion to display workers' comp-related data in sevencategories-from type of injury to time of day. Along with graphicsproduction, the software can produce other types of reports, suchas loss/run, audits, and claims filed by category.

Bruce Coates said by digitizing the traditional workflow,CyberComp ended up with a streamlined system designed aroundrisk-based questions presented to agents. The paperless processinvolves agents' ability to enter information and get answersimmediately, instead of waiting for word from theunderwriters.
Following the concept 'do a lot in a little time,' CyberComp'srecently launched Internet version allows 10-minute processing andimmediate quoting, according to Coates. “Hit the Bind button andeverything is in motion-from issuance to billing, and more,” hesaid.

According to Coates, CyberComp is looking into expanding itsdigitized process by introducing electronic signature technology.He said the company has a team of specialists working one-sign-based solutions.
Industry professionals who want to work with CyberComp fill out anelectronic application, which is automatically forwarded to theproper territory marketing rep. On approval, the applicant gets anID and password for access to the second level of the applicationprocess. If the application is approved again, a regional marketingdirector will make the final decision.

CyberComp-appointed agents can conduct business entirely online,including submitting applications for workers' comp insurance,receiving quotes, editing new business quotes, updating renewalquotes, and binding insurance coverage.

With HNC's AC-Web and SC-Web, carriers can send workers' compinjury reports over the Internet. Downs said there's plenty ofmoney to be saved when carriers can use resources online instead ofinstalling and maintaining in-house EDI reporting systems.

Meanwhile, HNC's Trans-Connect product-a modular tool kit forEDI developers-allows organizations to integrate the EDI processinto a transparent application. This enables real-time systemaccess to EDI rules and data.

AC-Web, according to Downs, is both the “pitcher and catcher,”because it allows users to submit e-reports to state organizationsand accept e-transactions from employers and electronic medicalbills. AC-Web formulates EDI transactions based on stateregulations, which, according to Downs, is time and cost efficient.AC-Web's ASP model features 100 percent of the client-hostedversion's functionality. SC-Web, a “catcher,” is purchased by stateorganizations to receive e-transactions, allow e-reporting, andintegrate data into legacy systems.
And you can hang on to some of your legacy systems, according toISO. The company believes its data reporting outsourcing solutioncan help prevent insurance companies from purchasing additionalwork-specific equipment or paying for software updating andcustomization.

Labor-intensive statistical reporting jobs are sent to ISO,which will do the worrying about compliance with changingregulatory requirements. ISO handles data from what it describes as'a highly regulated and highly political line of insurance' byusing front-end editing capabilities to detect errors early in thegame. It then gathers necessary regulatory reports to quench thethirst of workers' comp-bureau data quality requirements, and inthe end, extracts information from the data so companies canperform detailed analyses of their workers' comp business.

As Della Rocca put it, “Because there are lots of standardswithin each state, there are differences between bureaus, captivestate funds, and more.”

As a result of these differences, ISO provides its clients withthe Workers' Compensation Transactional Reporting Plan, whichincludes updates and documentation to further guarantee continuedcompliance.

Workers' comp regulations, policies, and practices change fromstate to state, month to month. It's a volatile line of insurancewith no sign of easing, according to ISO. As such, you should shopfor dynamic solutions that are easy to use, simple to upgrade andupdate, flexible to change with the regulations, and that cancommunicate over the Internet.