Projects

KMRD’s Claims Analytics Reduced Workers Compensation Costs $369,460 in First Year

KMRD reduced workers compensation costs by 23%/$369,460 in first year.

The Issues

• Our analysis of the loss picture indicated the existing workers compensation insurance program may have been overpriced by as much as 25%.
• We identified a number of claims which subrogation could have been pursued but was neglected.  When subrogation was pursued efforts failed due to weak contractual risk transfer language in their supplier’s contracts.
• The client was not happy with their claims service.  Our initial review identified $700K in losses which could have been lowered through an aggressive pursuit of Supersedeas funds.  In the State they were operating, an employer or carrier may seek reimbursement / payment from the State Workers’ Compensation Board if it was later determined compensation should have been terminated at an earlier date.

Our Response

• We prepared a summary of losses which clearly revealed the insured’s average losses as compared to its premiums and exposure basis.  This triangulation process revealed some surprising trends.
• We categorized losses by location so the client understood where their frequency and severity of claims were coming from.
• We investigated “large losses” (severity).  We investigated circumstances and subsequent prevention measures of each large loss.  Preventative measures and initiatives were documented and tracked in our RMI/RMA process.
• We opened lines of communication by pursuing and challenging the carrier’s claims representatives on all large losses, while asking a few simple questions. The carrier’s response to our initial inquiries confirmed our diagnosis. The claims person had not recently reviewed many of the claims and the logic in the reserving process required a total overhaul.
• We revamped their contractual risk transfer program to include firm insurance requirements, primary-noncontributory additional insured status and intermediate hold harmless language at a minimum.
• We Implemented a Plan including regular claims reviews, functional capacity exams to minimize hiring employees with prior injuries and mandatory post injury drug testing.

The Results

• Significant Reduction in Loss Picture – Our reserving, subrogation and supersedeas fund discussions with the existing carrier triggered a re-evaluation of the reserving logic yielding a significant reduction in the 5-year loss picture.
• Convincing Story – We developed a well-documented story positioning the historical loss information as being inaccurate and therefore the existing pricing structure was too high. Our claims specialists convinced the insurance community past losses were not a good predictor of the future because of the impact of loss control and claims management changes along with KMRD’s support with implementation / execution.
• Lower Price – A carrier reduced our client’s first year workers compensation costs by 23%/$369,460.

KMRD’s involvement reduced workers compensation insurance costs, enhanced profits and allowed our client to reinvest in the safety culture.  That’s the KMRD difference.