It Pays to Care. Period.

Who Cares?

In the years before I made my way into the glamourous industry of Work Comp insurance, I spent my time in HR and Management with a focus on Organizational Health.

Org Health, in laymen terms, is the practice of creating a corporate culture that keeps employees happy, productive, and ensures they all work towards a common organizational

goal (which is ideally one set by the leadership team, although this is not always the case).

This field had one common theme: we had to be OBSESSED with trying to make our company a great place to work. That work consisted of evaluating compensation, conducting performance evaluations, developing personal development plans, scheduling team building exercises—even making sure there was always beer in the fridge.

Having spent a handful of years essentially making our office a totally chill place to work and grow, you can probably imagine the proverbial whiplash I felt when I got into the world of insurance: “MOD’s” and “Claims” and “Premium credits.”

In life, we tend to see things through our lens of experience. But before we get to that, let’s set some groundwork.

What is Work Comp Insurance?

The actual definition of Work Comp insurance is: “a form on insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence.”

Which is essentially legalize for an insurance policy that builds a protective barrier between an employee and employer if an employee sustains a work-related injury. Essentially, it ensures the injured employee can afford all necessary medical care and makes it harder to sue the employer.

It is a sprawling and complex field, but essentially is comprised of a few key components:

1) Payroll amounts – the dollar amount paid to your employees, which the class code rates use to generate premiums due.

2) Job responsibilities (class codes) – each job duty in all industries have a different class code associated with it, and each of those class codes have a rate associated with the risk involved.

3) Claims – injuries sustained to employees that are reported to the carrier.

4) MODs – your “credit score” that reflects your claims history, and modifies your premium due depending on your track record (more claims, higher premiums).

The biggest controllable driver of cost: claims (and therefore, your MOD). And that’s where we’re going to focus our conversation for today. Just claims.

You can’t really change what your business operations are, so class codes are what they are. But you can and should do everything you can to increase safety and injury response times to minimize and reduce claims.

That cardinal rule: if we have less claims, and close claims faster, we will save more money because our future premiums will be lower.

But—is there a different kind of investment you can make in addition to safety equipment, solid and consistent training, and improved procedures? I posit yes.

Through My Lens

There is a human investment that you can make as a manager that effects how each employee sees themselves, irrelevant of the systems you have built around them. And because of our employees’ more positive professional identity—we may further negotiate our insurance premiums even lower overtime.

So how do I take my previous experience in creating a company culture where people want to work, and encouraging leadership to care about their direct reports, and use that knowledge to help business owners develop ways to manage their Work Comp claims?

Appropriately paid, aware that they are appreciated and the work they do matters, and see themselves progressing in the company.

Basic Org Health Tenant Incoming: First, I thought about what makes a happy employee. Not an exhaustive list but a happy employee is:

Appropriately paid, aware that they are appreciated and the work they do matters, and see themselves progressing in the company.

When an employee has these three things, they tend to care a lot more about an organization. Okay, cool. So what? How does that positive professional identity affect our claims?

1) Well compensated employees have the resources to take care of themselves, lowering their necessity to rely on external forces to take care of them. For example--say, an employee gets injured playing basketball over the weekend, but does not have health insurance. That employee may wait until Monday morning at 9:01 AM to “get hurt” at work, placing the financial burden on our company.

Or imagine that an employee sustained a work-related injury, but is living paycheck to paycheck. That employee may know that they don’t have the savings to take time off work and cannot survive on 66% of their normal wages. That employee may continue to work through an injury, causing a much larger claim if they exacerbate an injury.

2) The more an employee feels like they matter, the more respect they have for their organization. The respect manifests as honesty: they care about the organization and their managers, so they are far less likely to file a fraudulent claim. This drastically reduces claims experience over-time. One fraudulent claim can be detrimental after lawyers get involved. And even more so, since they care about the organization, they WANT to get back to work. They know the work that they do matters to their supervisor and direct reports because we have told them—so they feel like they’re letting us down when they’re unable to perform. So claims are closed faster.

3) And this employee wants to get back to work fast not only out of a sense of loyalty, but also because their future growth potential at the company has been communicated to them. We’ve done such a good job communicating their future growth, they know that they can’t achieve that goal from home. So instead of staying home and collecting indemnity benefits (a paycheck from the insurance company replacing their income), they are going to physical therapy, taking their medication, and doing light-duty. Which will drastically reduce claims experience over-time in both size and length.

Committed employees are more honest, follow safety rules, and get back to work sooner.

Now with my Org Health hat back on: our managers double down on this commitment to their employees. Our thoughtful managers in our healthy corporate culture call our injured workers and offer to bring them groceries, or pick their kids up from school, or just check in to see if they are okay.

Checking in on our injured worker and reminding them we really care about them; we’re reinforcing their commitment to our organization, and all of the wonderful attributes this positive professional identity gives our organization. And once again, making the bridge from injured to recovered smaller.

And we watch claims reduce in size and frequency.

The ROI on this human investment spans far beyond just lowering a work comp premium: higher productivity, lower training costs due to less turnover, desire to take on more responsibility, increased likelihood of referring friends and family to work for us, and so much more.

But we can see holistically why caring may actually cut costs on our Work Comp insurance.

So if a penny-saved is a penny-earned—it literally pays to care.

So if a penny-saved is a penny-earned—it literally pays to care.

-Joe Ross, Workers Comp Manager