How to Handle Small Workers Comp Claims

We're a workers' compensation specialist here at Rogue Risk, and we advertise ourselves in the marketplace.

Because of this, we get phone calls from business owners and decision makers inside of businesses all the time, even HR managers or whoever handles the workers' comp policy.

And one of the most common questions we get is, should we be putting in small workers' comp claims?

Now, small is relative to every company, so there's not really a right or wrong answer or a determining number on what exactly is small.

But here is the advice that I give them. It depends, which is the worst advice ever.

But I want to take you through basically what my thought construct is so that you can ultimately make the right decision for your business.

impact On your experience mod and your eligibility with a carrier

So every workers' comp claim has an impact on your experience mod and your eligibility with a carrier.

So if you have a lot of claims, if you have a lot of injuries and say there's a $50 injury, a $100 injury, or a $1,000 injury.

That $1,000 injury, from a frequency perspective, has the same impact on your premiums, your experience mod, and your eligibility as the $50 claim does.

Now, could the company pay a $50 claim out of pocket? Sure it could.

Does somebody even need $50 worth of medical expenses, which is really just an exam and probably nothing else? That needs to be determined as well.

But the issue that you want to be careful of, particularly with frequency, and this is where small claims come in, is your eligibility.

If you have a certain number of claims, some of the most cost-effective kind of premium or premier carriers, the carriers that really have great pricing, you're going to not even be eligible for them.

They're not going to want to provide you with access to their markets and the great rates that are possible because you're constantly putting claims in.

Because it says one of two things, or maybe both of them.

That one, something's going on at your business that you're having all these claims.

And you have a culture of sending anyone who's injured to either the emergency room or urgent care or the doctor's office.

And those are just not good things for low-priced or competitively-priced insurance products.

So first, eligibility. Second, your actual premiums in your experience mod. Your experience mod is the number one determining factor in what you pay that you can actually control.

So here's a quick example of how experience mod works. I recently had an organization call me who was struggling with their mod.

They had a 1.5 experience mod, and they should have been paying right around $14,000. And when you have experience mod, you times that $14,000 by the mod itself.

So you're essentially multiplying $14,000 by 1.5, and their premium was well over $20,000.

Now that means they're paying almost $7,000 more for their workers' compensation insurance than they should be. That's a huge problem. That's cash flow out of your bottom line.

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consider a deductible

So what is my recommendation here? Keep small claims off the books if it's possible. First, think about a deductible.

A $500, or $1,000 deductible on a workers' compensation policy can have a drastic discount on the premiums you pay just in general.

Now, yes, is the company coming out of pocket for those medical expenses in the event that someone is below that threshold? Sure they are.

But the goal is to put programs and procedures in place that keep your people safe and manage your injuries, ultimately reducing the number of claims you have in general.

Match that with a deductible, and now you're starting to lower your experience mod and lower your premiums.

Additionally, use a nurse triage program. Now, you may be saying to yourself, "Ryan, a nurse triage program sounds super expensive." It's not. You basically pay on a per-call basis.

If someone gets injured, they call a registered nurse who's trained on how to triage.

This can be whether or not someone needs to go to urgent care, the emergency room, or your preferred medical provider and get treatment, or if this is something that they don't actually need medical care for.

The impact of using a nurse triage program is astounding. In fact, as a non-scientific fact, our experience here has been most companies reduce the total number of claims that they have by 60%.

So implementing simple programs, thinking through your business, and considering a deductible that removes small claims from your policy can drastically impact your premiums by reducing them.

This can put cash back into your pocket and ultimately help you create a safer work environment and culture.

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