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The Dual Challenge of Managing Workers’ Comp

A multi-generational workforce presents complex workers' comp exposures for insureds.
By: | March 13, 2017 • 5 min read

America’s workforce is getting older. But it’s also getting younger.

How can that be?

Two parallel trends are driving this seemingly contradictory trend. Workers are delaying retirement and staying at their jobs later in life, while an influx of young, less experienced workers join the ranks.

Each group of this multi-generational mix comes with their own unique challenges. Older workers can have higher rates of illness and chronic health conditions, while younger workers may be healthier but more prone to a workplace injury due to inexperience, said Woody Dwyer, vice president, workers’ compensation for Travelers risk control.

“Many companies may not focus on the risk of increased medical costs associated with younger workers, but they are seeing greater injury frequency and severity due to unskilled or inexperienced workers,” he said. According to Travelers data, in manufacturing, nearly 28 percent of injuries occur within the first year of employment. This jumps significantly to 52 percent in construction. 1

The cost of medical care is also rising.

“While there has been a 50 percent reduction in workers’ compensation injuries over the past 25 years, medical costs will constitute 70 percent of each claim in just a few years,” Dwyer said. Corporations continue to focus on reducing the frequency of workplace injuries, and according to Travelers 2016 Business Risk Index, 59 percent of U.S. business leaders cite medical cost inflation as a top concern.

Managing these costs is critical for long-term success, but focusing solely on the aging workforce provides an incomplete picture of the challenge.

A key way to address the unique risks posed by both older and young workers, while reducing injury and better managing chronic conditions, is to engage employees at every stage of employment from recruitment to retirement.

Engagement at Every Stage

Engaged workers save their employers money not only by being safer, but also by being more productive. A Gallup survey of the American workforce showed that an engaged workforce experiences fewer safety incidents than disengaged employees, with the top quartile of the study experiencing 48 percent fewer safety accidents than the bottom quartile2.

But engagement looks different across the distinct contexts of hiring, onboarding and training, and providing ongoing support for all employees.

“Business leaders should recognize and harness opportunities for engagement in all of these critical points,” Dwyer said.

  1. Attracting and Hiring

Woody Dwyer, 2nd Vice President – Workers’ Compensation, Risk Control

Building engagement begins before a candidate even comes in for an interview. It all starts with the job description.

In addition to detailing a position’s essential functions and physical demands, the description should also outline associated safety measures and protocols. This sends the message up front that a company cares about its employees’ wellbeing and prioritizes safety just as highly as the work being performed.

The job interview itself provides another opportunity. A technique called “behavioral interviewing” shifts the conversation to focus on the candidate’s previous experiences and behaviors in challenging situations. It asks the potential hire to tell stories about themselves and provide examples that illustrate how he or she views safety.

“You can find out what skills and behaviors your candidate exhibits in specific scenarios that indicate how they’ll react and respond to a similar situation on the job,” Dwyer said. “For example, in addition to interviewing them about their knowledge of the job, ask them to describe a specific safety hazard they encountered and what they did. Ask them to describe their decision-making process.”

With detailed job descriptions and behavior-oriented interviewing, companies are more likely to hire candidates who understand the importance of safety and who are likely to stay engaged on the job.

  1. Onboarding and Training

Some of that support comes in the form of effective training, which is equally important for new hires, internal workers switching to a new role, and for injured workers in transitional duty.

“There is a difference between orientation and training,” Dwyer said. Rather than just walking new workers through the motions and instructing them on the use of safety equipment and procedures, trainers and managers should take a more active approach.

“This is another opportunity for engagement, for workers to get ingrained with the safety culture and practice not only their job skills, but also the habit of recognizing risks and responding appropriately,” he added.

New workers are generally most engaged and ready to form long term safety habits during their first six months, but this is also prime time for injury vulnerability as they become accustomed to their new roles and workspaces.

  1. Supporting and Engaging

Reducing employee injuries through strong safety training is one thing, but managing the injured worker’s recovery along with the medical costs associated with chronic, comorbid conditions is another.

According to the Centers for Disease Control and Prevention (CDC), half of all U.S. workers have at least one chronic condition, and the cost of treating these patients is twice as high as for those with no chronic conditions. Wellness programs that promote healthy lifestyles and aid workers in the management of diabetes, high blood pressure and other chronic conditions can help to keep medical costs in check. These programs can also encourage engagement because employees will see that their employer has invested in their wellbeing and taken steps to create a healthy workplace.

A strong post-injury management program can go a long way towards earning employees’ trust and dedication, while also controlling workers’ compensation costs. Taking a sports medicine approach to help injured workers return to work through transitional duty is often critical to shortening recovery time and limiting the life of a claim.

Gain the Advantage

Travelers can help insureds capture these opportunities for engagement with Travelers Workforce AdvantageSM, a model that provides insight into the vulnerabilities of their unique workforces and provides the tools to invest in your greatest asset – people.

“Risk Control tools and resources are scalable to your company needs and workforce size,” Dwyer said. “What it really provides is expertise and a holistic approach to managing workers’ compensation exposures with a unique set of resources to help attract, train and support employees while promoting a culture of safety. We know safe and engaged employees drive strong and productive business, and this is a competitive advantage.”

To learn more about driving employee engagement, visit Travelers at https://www.travelers.com/resources/workplace-safety/index.aspx.

1 Travelers 2014 Study

2 GALLUP, State of the American Workplace, Employee Engagement Insights for U.S. Business Leaders

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Travelers. The editorial staff of Risk & Insurance had no role in its preparation.




The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and generated revenues of approximately $28 billion in 2016. For more information, visit www.travelers.com.

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Improving the Claims Experience

Insureds and carriers agree that more communication can address common claims complaints.
By: | January 10, 2018 • 7 min read

Carriers today often argue that buying their insurance product is about much more than financial indemnity and peace of mind.

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Many insurers include a variety of risk management services and resources in their packages to position themselves as true risk partners who help clients build resiliency and prevent losses in the first place.

That’s all well and good. No company wants to experience a loss, after all. But even with the added value of all those services, the core purpose of insurance is to reimburse loss, and policyholders pay premiums because they expect delivery on that promise.

At the end of the day, nothing else matters if your insurer can’t or won’t pay your claim, and the quality of the claims experience is ultimately the barometer by which insureds will judge their insurer.

Why, then, is the process not smoother? Insureds want more transparency and faster claims payment, but claims examiners are often overburdened and disconnected from the original policy. Where does the disconnect come from, and how can it be bridged?

Both sides of the insurer-insured equation may be responsible.

Susan Hiteshew, senior manager of global insurance and risk management, Under Armor Inc.

“One of the difficult things in our industry is that oftentimes insureds don’t call their insurer until they have a claim,” said Susan Hiteshew, senior manager of global insurance and risk management for Under Armour Inc.

“It’s important to leverage all of the other value that insurers offer through mid-term touchpoints and open communication. This can help build the insurer-insured partnership so that when a claim materializes, the relationships are already established and the claim can be resolved quickly and fairly.”

“My experience has been that claims executives are often in the background until there is an issue that needs addressing with the policyholder,” said Dan Holden, manager of corporate risk and insurance for Daimler Trucks North America.

“This is unfortunate because the claims department essentially writes the checks and they should certainly be involved in the day to day operations of the policyholders in designing polices that mitigate claims.

“By being in the shadows they often miss the opportunity to strengthen the relationship with policyholders.”

Communication Breakdown

Communication barriers may stem from internal separation between claims and underwriting teams. Prior to signing a contract and throughout a policy cycle, underwriters are often in contact with insureds to keep tabs on any changes in their risk profile and to help connect clients with risk engineering resources. Claims professionals are often left out of the loop, as if they have no proactive role to play in the insured-insurer relationship.

“Claims operates on their side of the house, ready to jump in, assist and manage when the loss occurs, and underwriting operates in their silo assessing the risk story,” Hiteshew said.
“Claims and underwriting need to be in lock-step to collectively provide maximum value to insureds, whether or not losses occur.”

Both insureds and claims professionals agree that most disputes could be solved faster or avoided completely if claims decision-makers interacted with policyholders early and often — not just when a loss occurs.

“Claims and underwriting need to be in lock-step to collectively provide maximum value to insureds, whether or not losses occur.” – Susan Hiteshew, senior manager of global insurance and risk management for Under Armour Inc.

“Communication is critically important and in my opinion, should take place prior to binding business and well before a claim comes in the door,” said David Crowe, senior vice president, claims, Berkshire Hathaway Specialty Insurance.

“In my experience, the vast majority of disputes boil down to lack of communication and most disputes ultimately are resolved when the claim decision-maker gets involved directly.”

Talent and Resource Shortage

Another contributing factor to fractured communication could be claims adjuster workload and turnover. Claims adjusting is stressful work to begin with.

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Adjusters normally deal with a high volume of cases, and each case can be emotionally draining. The customer on the other side is, after all, dealing with a loss and struggling to return to business as usual. At some TPAs, adjuster turnover can exceed 25 percent.

“This is a difficult time for claims organizations to find talent who want to be in this business long-term, and claims organizations need to invest in their employees if they’re going to have any success in retaining them,” said Patrick Walsh, executive vice president of York Risk Services Group.

The claims field — like the insurance industry as a whole — is also strained by a talent crunch. There may not be enough qualified candidates to take the place of examiners looking to retire in the next ten years.

“One of the biggest challenges facing the claims industry is a growing shortage of talent,” said Scott Rogers, president, National Accounts, Sedgwick. “This shortage is due to a combination of the number of claims professionals expected to retire in the coming years and an underdeveloped pipeline of talent in our marketplace.

“The lack of investment in ensuring a positive work environment, training, and technology for claims professionals is finally catching up to the industry.”

The pool of adjusters gets stretched even thinner in the aftermath of catastrophes — especially when a string of catastrophes occurs, as they did in the U.S in the third quarter of 2017.

“From an industry perspective, Harvey, Irma and Maria reminded us of the limitations on resources available when multiple catastrophes occur in close succession,” said Crowe.

“From independent and/or CAT adjusters to building consultants, restoration companies and contractors, resources became thin once Irma made landfall.”

Is Tech the Solution?

This is where Insurtech may help things. Automation of some processes could free up time for claims professionals, resulting in faster deployment of adjusters where they’re needed most and, ultimately, speedier claims payment.

“There is some really exciting work being done with artificial intelligence and blockchain technologies that could yield a meaningful ROI to both insureds and insurers,” Hiteshew said.

“The claim set-up process and coverage validation on some claims could be automated, which could allow adjusters to focus their work on more complex losses, expedite claim resolution and payment as well.”

Dan Holden, manager, Corporate Risk & Insurance, Daimler Trucks North America

Predictive modeling and analytics can also help claims examiners prioritize tasks and maximize productivity by flagging high-risk claims.

“We use our data to identify claims with the possibility of exceeding a specified high dollar amount in total incurred costs,” Rogers said. “If the model predicts that a claim will become a large loss, the claim is redirected to our complex claims unit. This allows us to focus appropriate resources that impact key areas like return to work.”

“York has implemented a number of models that are focused on helping the claims professional take action when it’s really required and that will have a positive impact on the claim experience,” Walsh said.

“We’ve implemented centers of excellence where our experts provide additional support and direction so claim professionals aren’t getting deluged with a bunch of predictive model alerts that they don’t understand.”

“Technology can certainly expedite the claims process, but that could also lead to even more cases being heaped on examiners.” — Dan Holden, manager, Corporate Risk & Insurance, Daimler Trucks North America

Many technology platforms focused on claims management include client portals meant to improve the customer experience by facilitating claim submission and communication with examiners.

“With convenient, easy-to-use applications, claimants can send important documents and photos to their claims professionals, thereby accelerating the claims process. They can designate their communication preferences, whether it’s email, text message, etc.,” Sedgwick’s Rogers said. “Additionally, rules can be established that direct workflow and send real time notifications when triggered by specific claim events.”

However, many in the industry don’t expect technology to revolutionize claims management any time soon, and are quick to point out its downsides. Those include even less personal interaction and deteriorating customer service.

While they acknowledge that Insurtech has the potential to simplify and speed up the claims workflow, they emphasize that insurance is a “people business” and the key to improving the claims process lies in better, more proactive communication and strengthening of the insurer-insured relationship.

Additionally, automation is often a double-edged sword in terms of making work easier for the claims examiner.

“Technology can certainly expedite the claims process, but that could also lead to even more cases being heaped on examiners,” Holden said.

“So while the intent is to make things more streamlined for claims staff, the byproduct is that management assumes that examiners can now handle more files. If management carries that assumption too far, you risk diminishing returns and examiner burnout.”

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By further taking real people out of the equation and reducing personal interaction, Holden says technology also contributes to deteriorating customer service.

“When I started more than 30 years ago as a claims examiner, I asked a few of the seasoned examiners what they felt had changed since they began their own careers 30 year earlier. Their answer was unanimous: a decline in customer service,” Holden said.

“It fell to the wayside to be replaced by faster, more impersonal methodologies.”

Insurtech may improve customer satisfaction for simpler claims, allowing policyholders to upload images with the click of a button, automating claim valuation and fast-tracking payment. But for complex claims, where the value of an insurance policy really comes into play, tech may do more harm than good.

“Technology is an important tool and allows for more timely payment and processing of claims, but it is not THE answer,” BHSI’s Crowe said. “Behind all of the technology is people.” &

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]