March 27, 2008

Lower Workers' Comp Costs and Get Credit for It -- Here's How

A lot of research exists to show the cost-benefits of EAPs, but just citing this research in presentations to prospective EAP business customers will make them snore.

To make a memorable impression, focus on their business costs and exposures, and how the EAP will help reduce them.

You'll see facial expressions in the room light up, especially if you talk about workers' compensation.

There is one critical financial ratio that you must understand, and it pertains to workers' compensation costs. EAPs have the ability to alter this financial ratio in ways that no other profession can. Doing so could quantify their success and prove worth like we haven't seen in the field for a long time. This ratio is called the "workers' comp mod", (or workers compensation experience modification.) ...Stay with me here.

This ratio is quantifiable to the .00 decimal place. It measures risk and exposure and determines how much business customers will pay for their workers' compensation insurance in any given year.

This ratio is given to every workers' compensation insurance purchaser. Target this thing with EAP core technology applications and seek to lower it.

Have you heard of this ratio before?

This ratio is a possible link and pathway to regaining traction in the EAP field by helping business organizations lower their workers' compensation costs.

Below is a link to a video I found and embedded in this toolbox message that talks about this critical topic associated with workers' compensation costs. It's admittedly a little boring, but don't be fooled. EAPs need to have knowledge of what's being discussed in this video. You're not likely to learn about this topic at a typical EAP educational event.  (You know me. Sometimes I think we focus too much on the clinical, and not enough on the critical.)

Workers' Compensation "Mod Rates"
A company's experience is what counts in determining their insurance rates. (Digression: Right this second, you could go to the Department of Labor and find its latest list of 18,000 companies (or so) that are off the charts with injuries in the workplace. Many of these businesses have no EAP or ineffective EAP models. They are in big trouble and must drive down their industry rates. I got the notice recently but they didn't list the companies names outright like they did last year.  Still, its in the public domain. Can anyone say "crying for help.")

Continuing: The Mod is a ratio determined by examining 1) the cost of injured worker incidents over the last three full years, and 2) what the actuaries say will be the number of injuries expected for the type of work being done by employees. (i.e.,the secretary at the lumber company will cost less in workers' compensation premiums than employees cutting down trees.)

View the video twice -- once for the general concept and once for the details. You will then have a leg up when discussing this topic with business decision makers. You can then discuss behavioral issues within the workforce that could influence the rise and fall of mod rates and how the EAP can play a role in helping the organization.

If the EAP can do more supervisor training (easier with technology tools), intervene more where there’s stress, deal with the psycho-medical aspects of injury and recovery, improve morale, identify more occupational alcoholism cases, and better address family problems, you can bet that it will influence the lowering of the organization's Workers' Compensation mod. That's because accidents will be reduced that would have been influenced by behavioral factors. Next, focus on specific employee groups with your services that are at the highest risk.

When you see Mod rates and costs drop, claim the high ground.

Learn more. Sit down with the organization's risk management department. Talk with some property casualty insurance representatives. Try doing a Google search to learn about this subject, examine the Web site of the Risk and Insurance Management Society,  Explore what's being discussed at this Web site concerning the psychological treatment of the injured worker.

For added insight, examine a few personal injury cases and loss incidents over the past three years in a company you serve, ask about their mod ration and see if you don't start noticing possible connections to prevention relevant to employee assistance. 

Don't forget to write about your experiences for trade journals. Not EAP, but insurance trade journals where your customer go. Enough preaching to the choir. I suggest National Underwriter. Their circulation is 120,000. It's the  leading trade journal. Subscribe to it. Trade journals want new articles and ideas, and are happy to print what you can offer as solutions for their readers. Here's one article that took only one phone call to promote to this publication: "Behavioral Risk and EAPS"

Okay, check out the video. Get a cup of coffee to stay awake, but if you understand the implications here, you won't need coffee to perk up.

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