|Back to Columns | Print Column
Zachry: Top Cost Drivers in the Workers' Compensation System: [2020-03-20]
Here's my list of the top cost drivers in the workers' compensation system (in my order of importance):
Even though it is a long list, I know that there are other cost drivers that I have not listed. The order of importance may change given the type of employer or claims administrator.
Each of these cost drivers is a very complex issue. A few of these items are system problems rather than employer or claims administrator issues. They are also very closely intertwined. For instance, delays in reporting and compensability decisions result in increased litigation. The longer the lost time, the more the litigation.
As an employer or as a claims administrator, the opportunity to change results is based on an understanding of the fundamental causes of each of these cost drivers and to attack those causes with vigor.
For instance, when managing an alternative dispute resolution program in Southern California, we still occasionally had a few workers hire an attorney to represent them. Our ombudswoman called the workers and asked why they litigated the claim. Every response was that the front-line supervisor did not call the workers while they were off work.
Though the examiner, the ombudswoman and human resources had made a call that it was the supervisor who was really needed. For me, that was a wake-up call on the need to focus on getting the front-line supervisor engaged in the workers' compensation return-to-work process. Doing so reduced litigation.
What's on your list? What actions can you take to impact those cost drivers? Are you focused on reducing the exposure from that list?
Some claims operations and some employers are seeing claims results 40% below the state averages. This is because they are focused on reducing exposures.
Bill Zachry is a member of the California State Compensation Insurance Fund board of directors and chairman of State Fund's Audit Committee. He's the former vice president of risk management for Albertsons and Safeway, and a former senior fellow of the Sedgwick Institute.