By Julie Layton, Managing Director and Risk Management Segment Leader, Marsh
Whether you are new to a role or seeking to adjust your existing workers’ compensation program, instituting change can be as challenging as it is rewarding. Where do you begin? What are the cutting-edge products that may drive successful outcomes? How will you improve the experience for your injured workers? With ideas on high and the desire to make change, it’s important for work comp managers to take the time to understand where to make the right change and seek feedback from all stakeholders to supplement or adjust the vision. Here are some helpful reminders.
The most successful changes to a workers’ comp program deliver value for all the people impacted including senior leadership. If your current comp program is not well understood by senior leadership, focus on reinforcing and connecting workers’ compensation to their goals and how the changes you intend to make may impact their bottom lines. For example, as part of a workers’ comp program I oversaw, there was an allocation charge of $15,000 when a manager reported a claim. If the manager thought they could manage the medicals for under $15,000 they would delay reporting the claim. I socialized the idea of having no charge if the incident was reported within 48 hours but charging double ($30,000) if they reported the claim late. Overnight, this change aligned my early intervention claim goals to management’s goal of not wanting to incur a penalty. In another example, I found light duty always had a variety of objections. Trying to address these, I implemented a program that had a time limit. Once exhausted, the worker could be referred to a local charity to continue light duty. Coupled with light duty being offered at a reduced rate of pay, 85% of their Average Weekly Wage, workers wanted to return to full duty as quickly as possible and managers could get behind a more structured program.
Showing success by measuring your program outcomes also is important. Know your current spends and trends and set a baseline to measure progress against. If program compliance is your challenge, consider ranking measures. Those divisions or locations on the bottom will quickly pay attention. If you are changing the claim process, share expectations related to disruption of payout patterns. Accelerated claim actions, like implementing a claim closure project, can appear as cost worsening because you are paying faster than historical payout patterns. If inheriting a program, you will also want to measure your total costs and expected development. Six months or a year after you start is not the time to discover significant reserve increases are needed on historical claims. Seek to understand your collateral, your policy and TPA financial structure, and your actuarial reports from the onset. Review individual claims to ensure reserving practices and talk with your finance team to fully understand allocations, adjustments, audits and claim concerns of the past. No one likes surprises, so engage finance, your actuary and others to both help you measure as well as be a part of understanding the financial future and the positive outcomes expected from new programming.
Another critical aspect of your role is to take ownership of your vendor partners and to listen for how you can become the best partner to them and in turn they to you. Develop clarity to their role, authority and delivery expectations. Look for ways they can learn your business and ways you can learn from them what might be important to your injured workers. A great place to hear about new ideas and what your peers are doing is to meet with vendors. Thought leadership and benchmarking is abundant if we create the time to listen. The information gathered may help to either validate or challenge whether your program is the best of the best.
Beyond service, one of the biggest challenges with managing claims is the volume and getting service providers to engage strategically. Consider recognition incentives, such as annual contests that reward “The most claims closed in 90 days within current reserves” or “The most successful number of return to full duty in the next 30 days”. I did this and my adjusters loved it. It got everyone focused on one material outcome that changed the course of the claim. Adding great prizes will accentuate the priority they place on your results and the enjoyment of working on your account.
So, whether you are new in a role or just challenged by something new, take discovery, get your baselines, respect and enhance what is good, and absolutely change or raise awareness and recommend solutions to what may be better. Good luck!
About Julie Layton
Julie Layton, is a Miami-based Managing Director and Risk Management Segment Leader for global brokerage firm Marsh, where she advises large businesses on enterprise risk, compliance, safety, and claims. Prior to joining the brokerage industry in 2015, Julie oversaw workers’ compensation programs as Vice President, Risk and Compliance for Kohls Department Stores and as Director, Risk Management for Office Depot. Julie was elected to the Alliance of Women in Workers’ Compensation board of directors in 2022.
Marsh is the world’s leading insurance broker and risk advisor. With over 45,000 colleagues operating in 130 countries, Marsh serves commercial and individual clients with data-driven risk solutions and advisory services. Marsh is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people. With annual revenue nearly $20 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman.