A claim scenario from our friends at Allied Insurance - A Nationwide Insurance Company…
Sue works in the shipping department of a tool and die shop in Des Moines. She lifts a box at work, feels a strain in her back along with a jolt of pain and immediately tells her supervisor. The supervisor directs Sue to the company’s designated occupational medicine clinic, who investigates details of the injury, and then notifies the company’s workers’ compensation carrier of the incident for Sue. That same day, a claim associate from the insurance company calls the supervisor, as well as Sue’s coworker who witnessed the incident. He also calls the medical provider and Sue to learn details of the injury, the status of Sue’s health, and her ability to return to the workplace. He reassures Sue and provides important information about medical bills and possible future wage payments. A modified duty job is created to accommodate Sue’s lifting restrictions, and she returns to work the following day. After four weeks of PT and modified duty, Sue returns to her pre-injury job. The cost of the claim is limited to an in-network doctor visit, four PT appointments, and a follow-up visit to the treating physician. No indemnity payments are made because Sue returns to modified duty before the statutory waiting period, and the employer pays the difference in her wages to minimize the impact on the company’s experience mod and future premiums. The disruption to Sue’s life is limited to learning a modified role for a temporary period of time. All is well.
Same incident, different outcome…
Sue experiences the same injury, but in this scenario Sue goes to her family doctor because her employer does not designate a list of approved providers and does not communicate procedures for workplace injuries. The doctor instructs her to take a few weeks off and rest at home. Sue’s claim is not immediately reported to the insurance company, because the supervisor is not aware of the importance of on-time reporting, so no investigation or communication begins. Medical bills begin coming directly to Sue’s home, and because the claim was not reported, her wages are not being paid. Medical bills and daily living expenses are mounting and Sue is becoming frightened and agitated, so she calls a lawyer she sees on TV who specializes in workers’ comp claims. Sue tells the lawyer, “I hurt my back at work and I have a stack of medical bills and no income. Can you help me?” The lawyer answers, “Yes, I certainly can help you!”…
The injury began exactly the same as the first scenario, but the cost of this claim is about to skyrocket.
What is lag time? External lag time is the number of days it takes for a claim to be reported to the insurance company.
Why does lag time matter? Simply put, the greater the lag time, the higher the claims costs and disruption to the injured employee, dramatically higher according to a study conducted by Hartford Insurance Company. Hartford studied over 53,000 permanent-partial, and temporary-total claims over a three year period. The study reveals the following 1:
Who benefits when claims are reported on-time? When claims are reported and reacted to in a timely manner, everyone involved benefits:
Injured employees: receive prompt medical attention, their bills are paid and indemnity payments are received on time
Injured employees’ families: alleviated concern about medical costs; indemnity payments to support household expenses
Policyholders: experience lower loss ratios, lower future premiums and higher workplace morale
Agents: gain the loyalty of having brought a high quality carrier to the insured and experience higher retention rates
Our company: our data suggests we experience markedly lower loss and LAE ratios and fulfill our promise to our members.
Please let me know if you have questions.
Dan
dan@zeiler.com
708.293.5500
1 ‘The High Cost of Delays: Findings on a Lag-time Study’ by Glenn-Roberts Pitruzello, The Hartford Financial Services Group, NCCI Issues Report Summe
