What you should know about today's workers' compensation insurance services

May 11, 2000
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Remember when insurance company loss control reps spent their time casually walking through worksites, inspecting machinery, and filing recommendations? They were basically inspectors.

Not anymore

When Ken Kahanzadian goes to a facility today, he's digging for the root causes of accidents and workers' compensation claims. And he digs deep. Kahanzadian, a senior loss control consultant for EBI Companies, East Syracuse, NY., says workers' comp issues are linked to broader organizational issues such as morale, teambuilding and risky behaviors. In one case, he traced a nursing home's high injury rates to high staff turnover after interviewing employees and researching records. He also thought the training for new employees was poor. His solution: change hiring practices and have nursing assistants interview candidates to explain job risks upfront.

Kahanzadian takes a broad view of his work as a loss control representative. He wants to help shape the safety culture of a client's organization to match its business goals. He stresses the importance of creating a positive workplace environment that integrates safety and health issues into overall business objectives.

This is not your father's loss control rep. What's happened?

It's a matter of economics. Workers' compensation insurance is a commodity today, with premiums falling rapidly due to record-low injury rates in industry. Plus, workers' comp providers are in stiff competition for customers. In a soft market crowded with competitors, insurance companies are trying to distinguish themselves by pushing new services and strategies. This article shows how you can benefit from the changes taking place in the workers' comp field.

The new breed

The new breed of loss consultants like Kahanzadian go beyond the traditional focus on workplace physical conditions. They see safety as a continuum beginning with compliance and conventional safety manuals and activities and moving toward reengineering the work culture to address a broad array of potential hazards. Sure, techno-fixes such as air ventilation systems, machine guards, and ergonomic redesigns are still a priority. But loss consultants are also interested in behavioral safety--why people commit unsafe acts. And they examine management issues. Are safety and health considerations part of facility design, raw materials selection, equipment purchases, and employee hiring?

Ultimately, it comes down to leadership, says Larry Hansen, home office manager for Safety Management and Organizational Performance, Wausau Insurance Companies, NE Div., Syracuse, NY. Top managers must see safety as a basic value and build it into their business plan, he says.

To be sure, not all workers' comp carriers speak the language and espouse the ideas of Ken Kahanzadian and Larry Hansen. You have to search them out. The menu of services offered by insurers ranges widely, and many risk managers believe carriers "are not doing as good a job as expected," says Lance J. Ewing, loss control adminstrator for the School District of Philadelphia. Ewing cites a joint quality scorecard compiled by the Risk Insurance Management Society and the Quality Insurance Congress that found risk managers wanting better service and more responsiveness from insurance companies and brokers.

Customers expect more from their insurance carriers in general because risk management has taken on new meaning. In today's business environment, risk is no longer limited to physical hazards. Anything that is a potential threat to productivity and the smooth operation of a business is classified as a risk. There is growing recognition that a company must protect itself not only against fire and other kinds of physical damage, but operational and organizational risks that can damage its image, reputation, and marketing plans. Only when a company can control all its risks can it truly be productive.

These new customer demands, plus the current soft market for insurance coverage and the intense competition in the industry, are the reasons why more insurance companies are beginning to reposition themselves and rethink their menu of services. They want to provide one-stop shopping for all the services an insured needs. This 'integrated approach' can include a variety of consultative services. Specialty services can include in-depth statistical analysis; assigning specific expertise to clients such as occupational health nurses; and offering customized services tailored to different industries, such as forestry, entertainment, aviation, health care, construction, and high-tech, to name a few.

Some insurance carriers are also 'unbundling' their traditional packages and separately selling industrial hygiene lab services, safety consultation, ergonomic expertise, and behavior-based safety, according to Mike Shaffer, a loss control consultant for Molyneaux Insurance, Inc., Davenport, IA.

Shopping around

It's easy to shop around in today's soft insurance market and find a good deal. But shopping price is not necessarily the best way to reach your safety goals, according to most insurance experts. You may compromise the quality of your program, and more important, you may not really improve the bottom line.

Bill Montanez, assistant treasurer, risk management, employee benefits for Wallace Computer Services in Lisle, IL., has done business with the same insurance company for 20 years and says changing carriers is seldom worth it. He wouldn't consider it for his full-service printing company of 8,000 employees and 50 facilities unless he was getting "really poor service" and cost-savings of more than 20 percent were possible through another carrier.

"You have to decide what makes sense in terms of your business," he says.

It makes sense to develop a long-term relationship with your carrier, according to Michael C. McKeon, regional marketing manager for United Heartland, an insurance company based in Winthrop, IA. He says it takes about six months for loss control reps to understand the source of a client's losses, and to develop the right contacts within an organization to gather information to analyze and solve problems.

Wallace Computer Services has had a productive, long-term relationship with its carrier by matching policies and services to the safety and health needs of each facility, according to Montanez. Claims managers are assigned to each facility to build relationships, develop a sense of continuity, and have a greater bottom line impact.

Is the 'new face' of the risk insurance industry for real, or is it another a marketing ploy to sell services in a cut-throat business climate? It's up to you to find out. You can partner with carriers who will delve into organizational and behavioral issues to help you build a workplace safety and health culture that contributes to overall business goals. Or you can simply shop for the best premiums. Whatever your goals, it pays to be an educated consumer when you step out into today's fast-changing insurance market.

Smart shopping

Looking for a workers' comp carrier who will give you the best coverage and help you build a sound safety program? Loss control consultants, risk managers, and safety pros offer these tips:

  • First, assess how safety fits in with your business and corporate goals. Does you organization see safety as a matter of compliance, or is it a cultural value?

  • Look for shared business ideals between your organization and your comp carrier. Do you have similar vision and mission statements? Does the carrier have the tools and expertise to help you achieve your goals?

  • Study the carrier's financial and performance rating and stability.

  • Using a carrier in your geographical area facilitates communication and better quality service.

  • Ask for specialty services to address hazards particular to your business environment.

  • Check out the coverage in detail. Ask for specifics. Get all services in writing. Ask questions.

  • Check references with clients who are in similar industries.

  • Don't just talk to the salesperson--interview front-line service personnel. How well do they communicate? Will you be able to work with them? How is their performance measured: billable hours, call counts or results?

  • Think long-term. The best results come with time, as loss control reps learn how to tailor services to meet your business needs.

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