Lack of communication. In some instances, it creates alife-and-death situation; an air-traffic controller givinginstructions to a pilot, a heart surgeon directing a nurse, aquarterback shouting a play to his wide receiver. (OK, the last oneis a bit extreme, unless you have a huge bet on the game with a bigguy named Nicky the Nose.)

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In some cases a lack of communication can also be fatal withinthe insurance arena, particularly when it comes to agents talkingwith clients about their workers’ compensation programs. Becausewhen there’s no communication and an employer’s injuries aren’tmanaged effectively, the result is that premiums go up, theexperience mod goes up, and profits go down… the kiss of death fora lot of businesses.

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The sad part is, many agents think that they’re doing anadequate job managing their client’s injuries, when in fact they’reactually doing next to nothing.

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Case in point: I recently got a call from an agent whose clientwas a large industrial cleaning company based in the Northeast. Hewas perplexed because he had an experience mod worksheet thatshowed a $64,680 claim and a loss-run that showed the claim valuedat $24,940. I was told that obviously there was a mistake here,because those were two very different numbers.

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The reality of the situation is, the valuation date is 18 monthsafter a policy’s inception and every year after. This is animportant date because it’s when the insurance company sends allemployee injuries, both paid and reserved to the ratings bureau, which sets theall-important experience modification. And in this case the claimwas valued at $64,680 on the valuation date and was resolved sometime after that. This $40,000 difference resulted in theirExperience Mod being several points higher than it could have been,costing the employer thousands of dollars.

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The No. 1 rule of thumb here is that if your employer client hasunresolved employee injuries, you must know what’s happening. Theproblem is that most agents pay no attention to employee injuries,unless the employer calls with a problem. In fact, 90-120 daysbefore the valuation date, agents should be looking atloss-run reports, to determine what is unresolved and what is stillopen, and more important, why?

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It all comes down to your relationship with the claims adjuster,who is every bit as busy as you are, maybe more so. But thatrelationship should not be—nor does it have to be—adversarial. Itis imperative that you update your client on all injuries and comeup with a plan; every injury should have a plan. If you tear yourACL, your doctor has a plan. He’ll tell you the plan is to do thesurgery, take a certain amount of time to rehab, and in 9-12 monthsyou’ll be back in your driveway shooting hoops. But a plancan only exist if there is communication between all parties—theagent, Claims Adjuster, physician, employer and, yes, the injuredworker. (Let’s not forget the poor guy who threw his shoulder out,lifting a crate off a pallet.)

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It is understandable that communication between the ClaimsAdjuster and the doctor is going to be tough, taking into accountthe rigors of their respective schedules. It’s a challenge becauseneither gets paid to talk, they get paid to do. But thatsilence can sound like front row seats at a Metallica concert toyour client and to the injured party.

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It’s also important to communicate directly with the claimsadjuster to get as much information as you can; nothing good canhappen in a vacuum. Let the adjuster know that you need an updateon the claim so you can keep your client in the loop. This givesyou an opportunity to find out if the adjuster is missing anyimportant information that may allow them to lower reserves or evenclose the claim. There is no way to understate the importance ofthe experience mod. In the case I mentioned regarding the cleaningcompany, if there had been more communication that employer mayhave been able to shave $40,000 off the claim, which would havereduced their experience mod from 1.23 to 1.16.

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Bottom line: Injuries that can be closed out should be closedout. Keeping them on the books is nothing more than an accelerantto fuel an increase in the experience mod. And a high experiencemod can imply the company has a serious defect in its workplacesafety culture, and as a result you will not only be paying higherpremiums but, in certain industries, get shut out on bidding onmajor projects.

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It’s no secret that for the most part, the only reason companiesbuy insurance is so they can collect a check when a disasteroccurs. This being the case, why does almost every agent completelyabdicate responsibility for this task to a third party over whichthey have no control? I am not saying agents have to beclaims adjusters, but they should be more involved in the interestsof their client, and willing to get a little skin in the game. Bydoing so not only will you help keep your client’s experience modat a satisfactory level, in some cases where insurance companiespay profit-sharing, maybe make a few hard-earned dollars.

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You need to show your client that you deliver results, that youcare about their business and their financial well-being, and thatyou are vested in making sure they have a solid, mindful workplacesafety culture in place. Then, when that next agent comes aroundoffering a lower price, he might just have a tougher time sellingyour client on his services because of all the goodwill you willhave engendered with your client. When you turn your promises intoperformance and prove it to your client, price becomes secondarywhen they know your true value.

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Kevin Ring is the Lead Workers' Compensation Analyst for theInstitute of WorkComp Professionals, which trains insurance agentsto help employers reduce Workers’ Compensation expenses. A licensedproperty and casualty insurance agent, he is the co-developer of anew Workers’ Comp software suite that will help insuranceprofessionals in working with employers. He can be contacted at828-274-0959 or [email protected].

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