Building Customer Loyalty in a Soft Workers' Compensation Market

You don't earn customer loyalty by perfecting a great sales pitch. Successful agents build a solid book of business by providing real dollars-and-cents value to their clients. Florida's workers' compensation arena, with its state-mandated sticker price, skillful underwriting departments, and aggressive claims and loss control programs, can be a large factor in the ultimate bottom-line cost to your clients.

Knowing Your Carriers

Building a strong rapport with a handful of go-to workers' compensation carriers is essential in helping you develop and maintain profitable relationships. Understand who you are partnering with, and choose carriers you know to be financially secure, can cover claims, and will consistently pay dividends as promised. Select carriers that adhere to a healthy, long-term underwriting discipline that can withstand market fluctuations. They will ensure that your clients receive all applicable credits, discounts, or dividends. They also have the resources to provide valuable services to help your clients control losses, manage claims and–ultimately–lower their premium.

Controlling Losses

Nothing saves money for your client quite like proactive loss control. Remember, every dollar spent or saved by a carrier affects your clients' premiums, so preventing injuries is the primary way to keep costs down.

Many employers provide safety training to new employees. Then, if an injury occurs, they'll retrain, hoping to prevent future accidents. However, this approach has a low success rate. Partnering your clients with a carrier that offers proactive loss control services will help your clients investigate the underlying cause of the problem. For example, are employees using equipment improperly because of operational pressures, such as unrealistic deadlines? Sparking conversations like this and the resulting operational changes can have a high success rate in eliminating the exposure.

Step outside of the workers' compensation picture for a moment and you'll see even more benefits to comprehensive loss control. It is estimated that for every dollar a business spends on the medical and indemnity costs of a workers' compensation claim, up to an additional $3 is spent on hidden costs. A great safety program trickles over, saving money in other facets of a business. Because employees know how to do their jobs more safely, the need for equipment repair or replacement can be reduced. When there are fewer accidents, liability decreases and employee morale increases. That means employees are more likely to stay at their jobs, which in turn, lowers hiring and training costs.

Of course, the least expensive accident is the one that never happens. When looking at carriers, see what kinds of industry-specific safety programs are available. Match your clients with carriers that offer strong programs in areas where your clients are most susceptible to worker injuries:

Take safety on the road. Motor vehicle crashes are the most costly cause of work-related injuries–averaging $46,033 per workers' compensation claim filed in 2004 and 2005. Proactive carriers will lead your clients in creating fleet safety programs.

Don't just look around–look down. Second-runner-up in costly claims are slip-and-fall injuries, with an average of $23,929 per claim. Eliminating floor-level risks–such as non-existent floor mats, missing wet floor signs, and improper footwear–can help your clients wipe out these risks.

Emphasize proper body mechanics. Injuries resulting from bodily reaction and exertion (e.g. over-exertion or repetitive motion injuries) accounted for 39.7 percent of lost-time injuries in 2005. A carrier's attention to initial training and ongoing safety assessments is paramount.

Taking Care of Claims

Workplace injuries are estimated to cost U.S. businesses more than $120 billion each year. Top carriers are combating that figure with claims management strategies designed to save money for everyone involved. Essential methods that can benefit your clients include:

Return-to-work programs. The average workers' compensation claim costs around $10,000, but that same claim skyrockets to more than $70,000 after six months if the employee is not back at work.

Fraud investigation. According to the National Insurance Crime Bureau, workers' compensation fraud costs more than $5 billion per year. That means $1 out of every $10 of workers' compensation premium is lost to fraud. Smart carriers recognize this and investigate questionable claims.

Medical-provider networks. Medical costs now account for more than 60 percent of total claims costs. By negotiating rates with qualified doctors and medical facilities, carriers can sidestep this dramatic increase and pass significant savings on to your clients.

Prescription-drug programs. Prescription drugs represent the fastest growing com- ponent of overall medical expenditures and currently account for about 10 percent of medical loss dollars. Prescription drug programs add another layer of savings through negotiated rates and utilization reviews.

Getting It Right

In the end, the carriers you choose to work with influence the long-term value you provide to your clients. Do it right, and your reputation among your clients will soar. You'll spend less time troubleshooting and more time selling. As an added bonus, it's less likely that you'll be left scrambling to find coverage for your clients when the market shifts yet again.