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Risk landmine example: workers compensation

By January 19, 2021Blog Posts

Many of our clients tell us their previous agent’s approach has historically been to simply “sell them insurance” to address their risks. Our mission is quite different. We help our clients consider how they manage risk as well as how much they actually need to insure. To do this, we first guide our clients through a Risk Analysis to discover “risk landmines” that can cripple or kill their business if tripped. We then walk them through three non-insurance alternatives for removing, flagging, or insuring these exposures. The three alternatives are Avoidance, Contractual Transfer, and Retention.

Can the risk be avoided?

Is the process, procedure, service, or product, truly necessary in your business? If not, perhaps you should eliminate it. One of our clients is an owner of high-rise apartment buildings and performs all his own maintenance and landscaping. He purchased a hanging staging unit for two of his employees to suspend from the side of the building to clean the windows. When informed how high the rate was for his employees suspended many stories above ground, he sold the staging unit and contracted with an insured window cleaning company to perform this high risk task.

Can the risk be contractually transferred to another party?

A primary method is by changing the way you handle Indemnification and Hold Harmless Agreements. This depends upon your relative bargaining position with the other party, or parties.

How much loss can you retain without detriment to your finances?

In other words, do you have the financial resources to pay for losses out-of-pocket? If so, high deductibles, all the way up to self-insurance or a group captive may be options you can employ that decreases your need for insurance, and reduces the size of claims where insurance is required.

Loss Mitigation is also a useful tool in reducing the size of claims.  In the area of workers’ compensation, sometimes the best solutions involve not just claims prevention, but the way claims are actually managed after an injury.

Let’s use an example to illustrate:

Once an employee has been injured, what plan do you have in place to return them to the workplace, in a light duty status? If your company has no workers’ compensation “Return to Work” program, the cost of claims often escalate by 30-50%! Employees left at home watching daytime television hear a litany of offers from plaintiff lawyers to “get them all they deserve.”  In fact, they will get them no more or less than the coverage provides, but the attorneys fees exacerbate the size of the claim.

The Keystone Advantage

As a Keystone agent, we have access to tools and expertise that can further help you manage workers compensation claims:

  • Claims Management: Keystone employs experts who review claims and serve as a liaison between you and the insurance company to advocate for coverage or subrogation where appropriate. For example, say one of your employees who is transporting goods is injured when hit by another vehicle. Although his injuries would fall under your workers’ compensation policy, the other party that injured your employee is actually at fault. Depending on circumstances and severity of the claim, we may advocate with your insurance company to subrogate, and make the other party’s insurance reimburse our insurance carrier, thereby eliminating the cost of the loss from our insurance record and our experience modifier.
  • Risk Management: Keystone’s team of risk management experts can help you manage all facets of your work comp program such as preparing claims, monitoring medical utilization, coordinating litigated claims, and designing a return-to-work program.

These are just some examples of how our dramatically different approach can help you uncover “Risk Landmines” and better protect your business!