As you may recall in Part I of this series, I shared the concerns the risk management and insurance community has about employer workplace issues for 2016. They believe most employers may be unaware of them and that decision makers need to know about these issues, plus have ways to address the challenges they present. Otherwise, it will be difficult for an organization to meet their financial goals and objectives.
Here are some concepts you need to be familiar, because they affect the personal lives of employees and the financial success of an enterprise.
The chart below illustrates how workers’ compensation is the center, really the “heart,” of all risk management and insurance programs an employer may purchase. Workers’ comp is interrelated with these programs due to:
- The inherent risks and claims that may occur:
Let’s look at an example: While driving an employer vehicle, an employee causes an accident that results in their injury, damage to the car they are driving, and property damage to the automobile they struck and injuries to its driver.
The claim incident now involves a variety of insurance coverages: the workers’ comp for the injured employee; automobile collision insurance from damage to the employer’s vehicle; automobile property liability damage to the vehicle that was hit and bodily injury liability to the driver of the other car.
Should the injured employee driver be unable to work for an extended time, HR will become more involved to determine if the employee will continue to be qualified for the employer sponsored medical plans. If the employee is no longer a qualified employee, they and their dependents will need to switch their coverage to a COBRA or FMLA plan.
- The way premiums are determined for other insurance and risk management programs:
There are several ways premiums can be affected and here are examples:
When some insurance companies provide all, or most of the insurance policies for an employer, the employer may receive additional premium discounts for those policies they purchase in this “bundled” arrangement.
In other situations, workers’ compensation insurance companies create strategic relationships with unaffiliated group medical programs that provide additional premium discounts when the employer purchases both plans in this arrangement.
Some workers’ comp insurance companies have been known to provide a premium discount when an employer provides their employees with a group medical plan
Workers’ Comp: The Heart of Your Insurance Program
The cost of workers’ comp insurance is actually a reflection of the total expenses an employer incurs due to workplace injuries and illnesses. When managed properly, this helps keep your company’s bottom line healthy – and growing.
The workers’ comp program is unlike any other insurance policy you will purchase, because it is a Financial Tool.
Workers’ comp is a way to finance the costs of workplace injuries/illnesses. Think of it like a credit line:
When you use it, you pay it back, plus more
In that light, the cost of a workplace injury/illness is actually paid by the employer through higher future premiums.
Fortunately, there are many opportunities for you to reduce your company’s workplace injury/illness costs through your involvement in the claims process, and with the guidance of a risk insurance advisor.
So, always keep in mind this is the employer’s money we’re talking about, not the insurance company’s.
As an employer, the extent of your involvement in a workplace injury directly affects the success of the outcome. Third parties and other stakeholders (i.e., medical clinics, insurance companies, applicant attorneys) have goals and objectives that are in conflict with yours. As you can imagine, they are interested in the lowest cost and the highest profits to their organizations. It is not the wellness of the “patient.”
Let’s face it—you have a vested interest in the well-being of your employees and the financial health of your organization.
From that perspective, why wouldn’t you want to be part of the solution?
Without an employer’s guidance and the managing supervisor’s involvement, the injured employee is likely to feel confused and alienated when he or she enters the workers’ comp system. Most feel compelled to hire an attorney, which lengthens the life of the claim and creates more expense for the employer.
In the next session we will get into the actual workplace issues. So, stay tuned, or If you wish to jump ahead, go to www.risksnthreatsmatter.com and down load Workplace Issues You Need to Know for 2016. If you wish to CLICK HERE, you can down load your own copy now.