Take Control of Your Costs
Ever asked why would you self-insure your workers’ comp risks? I can think of two reasons.
First, if done right, it will provide better care for your employees and save money. Self-Insurance is a great way to accomplish the twin goals of the grand bargain, taking care of people and taking care of business.
Many employers also self-insure to align their workers’ compensation programs with their corporate values. They know that no vendor will have the same feel for their employees, their workplace or their business as they do. For the employer with the will to make the investment in time, the ROI is substantial.
Self-insurance is not an opt out plan. Rather, it is an alternative way for the employer to work within the workers’ compensation law, have some control over how their employees are handled in the system, and still retain exclusive remedy and common law defenses.
A self-insured employer is the carrier for workers’ compensation claims and can specify how, within the law, claims are handled. While most self-insureds use a TPA to administer claims, they can ensure their employees are treated with dignity and respect and can do away with many of the administrative frictions that irritate injured workers and employers alike.
Self-insurance is a great way to accomplish the twin goals of the grand bargain, taking care of people and taking care of business.
This is for the hands-on employers, the ones who want to manage their business and reap the rewards. Like the rest of workers’ compensation there are several moving parts to self-insurance.
The employer’s investment is primarily the time it takes to manage their workers’ compensation program. Depending on the size of their organization, this can be an additional duty or a full-time position, but must be at a decision-making level to be fully effective.
Self-insured employers have a great deal of flexibility in structuring their programs. They can choose the level of exposure, who administers their claims, and vendors such as utilization review, bill review and case management.
Companies with a moderate to large number of employees will always pay their workers’ compensation losses over time. Premiums and experience modifications exist to make sure that happens.
The self-insurance option can sound a little scary, and many employers don’t really understand how it works. After all, premiums are a known cost and losses are a risk.
There is help available on the nuts and bolts through self-insurance associations in most jurisdictions. Information on who to contact about qualification and referrals to other companies currently self-insuring will be available for employers who want to explore this alternative.
Desire is the first step. Information is the second. If it sounds like a good idea for your company, do a little research and talk to other self-insureds. If you decide its right for you, your broker or an outside consultant can help you set up a program.
Many employers are just dissatisfied with the value proposition of how their injured employees are treated vs. the cost of insurance and lack of control.
Self-insurance can address all of those issues and put the success of the program squarely in the hands of the employer.