Workers’ Comp Policies: More Than a Small Commission


Kevin Ring, Lead Workers' Compensation Analyst, Institute of WorkComp Professionals, on the Connected Insurance Podcast, presented by Agency Revolution

Kevin Ring, Lead Workers’ Compensation Analyst, Institute of WorkComp Professionals

While workers’ comp may not seem like the most rewarding policy to sell, Kevin Ring from the Institute of WorkComp Professionals illustrates how workers’ comp policies can be used to save your clients money and build trust in your agency. Listen to this discussion to discover: 

  • How you can reduce costs for your commercial-lines clients to gain their gratitude.
  • Kevin’s checklist to help your clients hire the right people and reduce the risk of claims.
  • The benefits of partnering your clients with a physician to test for the right restrictions and conditions for their field of work.

In a relationship business like insurance, it’s not always about the commissions. Listen to this discussion to see where the real power of workers comp can be found for insurance agents. Visit this page to find resources you can use to help your commercial lines clients.

Presented by Agency Revolution, the Connected Insurance Podcast provides weekly opportunities for listeners to dive deep into the trends affecting insurance agents and brokers today and to gain proven strategies and tactics for agency growth. Our hosts facilitate thoughtful panels and 1:1 conversations with a variety of prominent thought leaders, with a focus on how to streamline and drive operational efficiency for your independent agency through the intelligent use of technology.


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Transcript

Joel Zwicker: Hey, Kevin. Thanks for joining us today. I do appreciate your time.

Kevin Ring: Joel, thank you so much for having me. It’s exciting to be here.

Joel: We’ll jump right into it here. We’re talking about a topic that I’m not entirely familiar with, so why don’t you tell us a little bit about the institute. So introduce our listeners, if you will.

Kevin: Absolutely. The Institute of WorkComp Professionals trains, certifies and mentors independent insurance agents in a workers’ comp process that is proven to help agents write more business and get better results for their clients. We began actually right at 18 years ago now. In October of 2001, we held our first Certified WorkComp Advisor Institute and since that time, we’ve been training agents. Then what sets what we do apart, I think, from a lot of the other designation programs in our industry is that after you complete the training, you have access to our team of experts and a library of resources to help you implement the process.

So rather than coming home from a seminar and being, “Man, that was really great. I’m really excited to do this,” and then having it wind up on the shelf- as all of us have done either in our personal lives or professional careers- you have a team of experts sitting behind you, helping you answer those difficult questions and untangle things for your clients and potential clients.

Joel: Awesome. Here is what I know. As I told you, I don’t know a whole lot about workers’ comp, but here’s what I do know. It seems like their premiums are pretty good, so it would lead me to believe that the revenue is pretty good. Why wouldn’t I get into this as an independent insurance agency?

Kevin: Well, most independent agents that even dabble in business insurance do write workers’ compensation. Historically, agents have shied away from focusing on workers’ compensation because the commissions have always been very, very low. In fact, several years ago I was doing some research and I found an article from the 1930s complaining about low commissions in workers’ compensation. The commissions have always been low because with few exceptions, the coverage is compulsory. So if everybody has to buy it, it must not take any particular skill to sell it. An insurance company would say, “Well, why are we going to compensate you handsomely for selling something they literally had to buy?”

What we’re seeing in the current marketplace is over the last five to seven years, rates have been down, and down and down, and it’s created an interesting market dynamic in that typically, especially in workers’ compensation, people have talked about hard markets and soft markets. But what we’re seeing now- and this was highlighted by some information that NCCI put out earlier this year- we’re seeing an interesting combination of hard market and soft market symptoms, if you will.

In a hard market, the market capability or capacity- excuse me- tends to dry up. You see fewer and fewer insurance companies willing to extend the coverage and it becomes more difficult to get– You have more underwriting discipline and prices go up. In a soft market, you see more market capacity, more insurance companies willing to insure more risks. You tend to see a drop in underwriting disciplines, so insurance companies will take anything no matter what they look or smell like, and you see rates dropping. What we have in the marketplace today is increased underwriting discipline but decreasing prices.

So for some agents and for some employers, that’s causing a drop in the focus on workers’ compensation. Because in many States, in North Carolina, California and Indiana are all certainly in this category and there’s many others, rates are down 50% over the last five years. So as a business owner, I might have grown my business in this economy that’s expanded for over 10 years in a row and I might’ve doubled my business in the last five years, but my workers’ compensation premium may be more or less the same.

So it’s much more difficult today for agents to get employers excited about, “Let me help you reduce your workers’ comp premium. You’re paying too much for your workers’ compensation, let me fix that.”

Joel: As I was sitting here thinking, I know most of the– When I look at LinkedIn and the workers’ comp, if you will, ‘experts’ that I see out there and what they’re pushing out there is, “Hey, are you overpaying?” Or, “What can we do to reduce your workers’ comp rate?” Based on what you just said, everybody’s there, everybody’s got lower rates and probably employers are seeing that. So how does– I think what you just said, we’re in a bulk business here. How do I grow my bulk of business if the traditional, “Hey, I can save you 10, 15, in some cases, maybe even much more than that percent on your workers’ comp”? There’s got to be a strategy there, in your expertise, how agencies can grow and prosper in that environment.

Kevin: Absolutely. To be clear, none of the information you’re seeing is now incorrect. Most business owners are overpaying for their workers’ compensation. We still know that 75% or more of all premium audits are incorrect. The vast majority of experience mods are mismanaged. When the premium audit is incorrect, it’s far more likely that a business owner is going to pay more premium than they owed, rather than the insurance company collecting less premium than they were owed. But the challenge is that that pitch isn’t as effective as it was five, six, seven years ago.

So what we’re finding agents being more successful focusing on are the pieces of the workers’ comp process that focus on people. Because ultimately, workers’ compensation is an employee benefit. It’s very much like health insurance in that way. But for various reasons that I’m sure you could write a college research paper about, workers’ compensation wound up on the property-casualty side rather than on the employee benefits side.

Joel: Sure, that makes sense. Just backtracking here a little bit, I’m a big proponent of the customer experience. Regardless of whether you’re doing workers’ comp or maybe more traditional P&C, if you will, type coverages. But it made it sound like to me- and I’m not trying to take a shot at anybody here, I’m just calling it is what it is- sounds like what we’re saying is overall premiums are down, people are making less money, traditional models don’t work, but the majority of businesses are still overpaying because either a symptom of all those things; I don’t want to put the time in because there’s not as much money in it for me. But it really sounds like that maybe there’s a lot of workers’ comp people out there that are asleep at the wheel.

Kevin: I think that’s generally true, and I think that’s a large part of what allows us to help so many agents and see the success that our agents have in the marketplace. Is that the traditional P&C agent focuses on all of the other coverages and then says, “By the way, here’s a workers’ comp quote.” Or, “I shopped your account to five different insurance companies and here’s the best price.” That leads to lots and lots of problems, the end result of which are higher workers’ comp premiums.

When you have a process- and there’s a process at the heart of everything we do and workers’ comp is a process. When you follow the process, not only are you going to wind up with the lowest possible workers’ comp premium that you have, but you’re going to have a more productive workforce. That’s really where we find agents having success today because while employers may not be feeling a tremendous amount of stress about their workers’ compensation premium, what they do tend to be stressing about is getting and keeping great employees. Because nationwide, employment is just about as low as it’s ever been. While you never don’t hear people complaining that you can’t find good people, today you literally can’t find good people.

Robert Hartwig, I listened to him give a talk a few months ago at the NCCI’s annual meeting and at that point in May- and I don’t have any reason to believe this has changed- there were more open jobs than there were people looking for work. So there, literally, aren’t enough active humans to fill all the positions that the economy wants to fill. When you’re in that position as a small to medium-sized business owner, where most independent agents spend their time, how are you making sure that when you hire someone, it’s the right person and that they’re ready to do the work? And then once you have an employee that you value, how do you make sure that when they suffer an injury at work that they don’t get sucked into this vortex that workers’ comp can be?

Joel: Got it. There is a ton of information there, so let’s get back to your process and what you guys do here. Understandably, this is not a seven-hour podcast, which I’m pretty sure you and I could go at this for that long. Let’s give the listeners something; like how do I make an impact on that as an insurance agent out there providing workers’ comp to my marketplace?

Kevin: Let’s just focus then on the parts of the process that are really what I’m talking about here. How can an insurance agent help their business owner-clients get and keep great employees? Because there are certainly things to talk about when we talk about properly classifying the business. In most States, there’s more than 500 different classifications that a business could be assigned to. And too often, agents do absolutely zero work either with their current clients or with the clients that they’re trying to take the business and win that business. They do almost no work to confirm those classifications are correct. There are problems with the experience mod, either because the classifications, the premium audit are incorrect, or because an employer doesn’t have an effective injury management process.

What we’re really talking about when we think about helping our employer-clients get and keep great employees, it starts with the getting part. It starts with hiring someone. When we’re thinking about workers’ compensation, we’re thinking about being absolutely certain that every single person that is hired by a business is physically and mentally capable of doing the work they’re being hired to do. The challenge- and we’ve seen this before when the economy has grown and contractors are an easy target for this because– I can’t tell you the number of agents that I’ve heard tell me that some of their clients, if someone can fog a mirror, they’ll hire them.

Well, the problem with that approach is that if you’re putting someone into a job that requires manual labor, how do you know that person is capable of doing that work? Because if they’re not capable, then you may have just bought a back surgery, or a knee surgery or some other severe injury that’s going to dramatically impact your workers’ compensation costs for years to come. So that process begins with employers implementing a conditional offer of employment.

For your listeners, if they want to get a copy of these forms that I’m going to talk about, they can go to iwcpro.com/revolution, and they’ll be able to download these and see what we’re talking about and use them with your clients.

The conditional offer of employment tells the employee, “You’ve got the job. Congratulations. However, there are some conditions to you getting this job.” Now, we’re familiar with the idea of sending an employee for a drug test. We might send them for some sort of a physical, but what most employers are not doing is telling the employee that when you receive this medical exam, if the doctor tells us that you are not physically capable of doing this job, then we are going to have to withdraw the job offer. Then we’re going to tell the employee, “These are the essential functions of the job.”

This is another step that employers often miss is having ADA-compliant job descriptions that list the essential functions of the job. Because most employers over 20 employees have an obligation to reasonably accommodate employees’ disabilities, but in order to allow them to do the essential functions of the job. However, if the employer has never outlined what the essential functions are, then you’re going to have more difficult time accommodating them because you haven’t defined them.

So, we’re going to tell the employee, “This job offer is conditional. These are the essential functions of the job.” We’re even going to ask that employee if they know of any reason they may require accommodation to complete those essential functions. The employee, the new hire, is going to sign this form and then we’re going to send the employee off to the doctor.

One thing– We’re not going to dig into this process today because like you said, we don’t have seven hours, but it’s critical that employers have a relationship with a physician. The vast majority of jurisdictions, employers have some degree of control over what doctor their injured employees go to when they suffer an injury. In all cases, the employer has the right to tell a new hire, “You’re going to this doctor for a medical exam.” When that employee goes to the doctor, we’re going to ask the doctor to complete a medical history questionnaire. The doctor is going to ask and examine this new hire, and check on any medical conditions that they either have or have had in their past that could impact their ability to perform the essential functions of the job.

At the end of that exam, the doctor is not going to pass the answer to these questions back to the employer. I want to make that very clear. Your personal medical history is obviously protected by HIPAA. What the doctor is going to do, or what we need the doctor to do in this process, is to come back to the employer and say, “Joel has no restrictions. There’s nothing about Joel’s medical history or medical condition that creates any restrictions for the job you’re hiring him for.” Or, “Joel can’t lift more than 20 pounds. Joel needs to sit down 10 minutes of every hour for whatever reason.” Then at that point, the employer has the opportunity to decide whether or not they can reasonably accommodate those restrictions. Perhaps the job requires lifting 50 pounds and if you can’t lift 50 pounds, they have no way to accommodate that.

When I was a young man, I worked at a very large package delivery company unloading packages off of trucks at 4:00 in the morning. If you couldn’t get in that truck and lift the box that was at least 50 pounds, you couldn’t do the job and they weren’t going to hire you. So your employer-clients have the same types of restrictions. If those restrictions, the doctor places on their physical abilities you can’t reasonably accommodate, then you withdraw the job offer.

I want to make it very clear in this process; the goal of this process is not to not hire someone. You are only completing the conditional job offer and sending an employee for a post-offer, pre-placement medical exam after you’ve decided you want to hire this person. This is who you want. If we do have to withdraw the job offer, then what we’ve done is we’ve both protected the employer from a very expensive workers’ compensation claim, but we’ve also protected this individual from putting themselves in a position where it’s not a question of if but only a question of when they’re going to suffer an injury. Does that make sense?

Joel: It totally makes sense. I’m going to ask you just to put a dog ear on this because I can tell you got more to share here. I want to step that back and maybe oversimplify it for listeners here, and I’m sure everybody that’s listening gets that. What you just laid out is the ability for you to provide something very unique to your clients. Think about your own situation. Kevin, you’re using the example as a contractor, but how many agencies– I talk to more agencies than anybody else and everybody’s always dealing with staffing, employees or whatever have you.

How much value if- think about you as an insurance agency owner- if someone could provide a real good strategy to not just hire people, but hire the right people because it’s expensive to hire people. But all of a sudden, someone’s added that value to help you through that process so you didn’t have to go through it every six months to hire somebody new. Think about that in your own world then start providing that out to your customers. Kevin has just done a great job laying that out.

Did I miss a step there, Kevin, or I maybe oversimplified a little too much? But that’s what I just heard.

Kevin: No, you’re absolutely on the right track. Then for your clients, when we’re talking about high-value workers’ compensation clients, what we’re really talking about is that if you know the moment that someone walks in the door that they are physically and mentally capable of performing the essential functions of the job, then you have someone who is less likely to suffer an injury. I would encourage the folks listening to this to either think about this or even better, talk to your biggest clients. If their best employee suffered an injury and couldn’t work, what is that going to cost them, both in hard dollars but more importantly, how do they feel about what that’s costing them? When the most productive person on their shop floor; the best welder, the best whatever it is they have, if that person suffered an injury and couldn’t work, what is that going to cost them?

When you’re hiring the right people, you are making it less likely that they are ever going to suffer an injury that’s going to cause them to be unable to work.

Joel: Got it. Just to repeat, I know you offer this up. You guys at the Institute have the resources for agencies, you just provided the website address a few moments ago, so you kind of got this done for them.

Kevin: Absolutely. The conditional offer of employment form is ready to go, the medical history questionnaire will also be there at iwcpro.com/revolution. I would mention just briefly about the medical history questionnaire. It’s very extensive, but it’s our recommendation that as you partner with physicians, you work with your physician on the ground. Many physicians that specialize or have a focus on occupational medicine may have their own medical history questionnaire, that’s great. It’s also our recommendation that you work with the doctor to narrow the scope of the questionnaire because many of the conditions on that questionnaire may not ever be capable of creating restrictions for your client-specific work. And of course, as insurance agents, we are not well positioned to dose out that medical knowledge, if you will.

Joel: No, that makes total sense. Kevin, we’re getting a little short on time here. I want to give you the opportunity- you provided a web address, but if someone wants to connect with you directly. But before I do, is there anything else you want to add to what you just provided us with this process? Like I said, I know we could go on forever, but any other I’s that need to be dotted or T’s that you want to cross with that?

Kevin: Well, so the next step in the process- and I will, tighten this up a touch- but the next step in the process is once you hire someone- and with your current employees- it’s our suggestion that you let the employees know how workers’ compensation works before they ever have the opportunity to suffer an injury. Because I don’t have to tell the agents listening to this that there are attorneys circling your clients constantly. I see it driving all over the country with the billboards, you see it on TV every day with attorneys’ ads. Letting the employees of your clients know how workers’ compensation works, that they’re not going to have any medical bills to pay, they don’t have copays or deductibles like they do with their health insurance. What is the waiting period? How long are they going to wait to get paid if they suffer an injury and can’t work? How much money are they going to collect when they’re out of work?

We’re going to tie all of this back to the fact that the employer has a recovery-at-work program. Employees, if you suffer an injury, this is who you need to talk to to make sure that it’s reported immediately. Not after a few days when you just don’t feel better, but we’re going to report it immediately. We’re going to send you to this doctor and they’re going to take care of you, and they’re going to send you back to work and you’re not going to have to pay a penny for that medical care. The doctor is going to send you back to work and tell us what you can’t do, and we’re going to find work for you to do so that you never lose a penny of your wages. So that you don’t have this unpaid time off that workers’ compensation provides and you don’t take a pay cut because workers’ comp is only going to pay two-thirds of your average weekly wage.

What we’re doing in this process is we are explaining to them that workers’ comp is there for them and that they have it as if they suffer an injury, but it’s also not something to be taken advantage of. What we’re trying to do is to remove the fear. Because if you watch these attorneys’ ads, so many of them are preying on that fear. “Your boss, your company, the insurance company, they’re all out to get you. They don’t want to pay you what you’re owed. I care about you.” Call me, we’ll get it for you.” If we can wrap the employees up and make sure that they understand how this works, then we’re much more likely, when someone does suffer an injury, to get them back into the workplace, to give them productive work to do until they’re able to do their full-duty job.

When you present all of these to a business owner, and you couch it around this idea that it’s not that we’re ignoring the cost of workers’ compensation because guess what? If you do these things and your client executes on this successfully, their workers’ compensation costs will be lower. But what we’re focusing on is the number one problem that employers are having today, which is their workforce. We’re defending their workforce and we’re helping them defend their workforce from all of these outside forces that are trying to pull at it.

So, we’re hiring the right people, we’re making sure that those people understand how the process works with workers’ compensation so they know they’re taken care of. Then if they suffer an injury, we’re aggressively bringing people back to work. Return-to-work is something that our industry has talked about for years and years, but we consistently, at the Institute and working with the agent clients that we have, consistently see employers resisting it because they don’t understand the benefits. They don’t understand that every single day an injured employee is out of work is a day- it’s less likely they’re ever going to return to that job.

What we know is that if we get those people back into the workplace, they’re more likely to return back to their full-duty job and that employer is going to lose less productivity than they would have otherwise.

Joel: Awesome. Kevin, let me just say this, I really enjoy doing this podcast. One thing I strive to do when doing my part in this podcast is providing stuff that people can actually use today. You don’t have to go and do a bunch of planning and research- of course, you want to plan when you want to do anything- but something they can hands-on, grab, and you know what? You’ve just provided that. It’s more than just the link you provided. I really appreciate your time today. Tell us, if I’ve got more questions about workers’ comp and I want to talk to Kevin Ring, what’s the best way to find you?

Kevin: There’s several very effective means. My phone number is 828-274-0959. You can send me an email. It’s kevin@iwcpro.com or you can go to Schedule with iwcp.com. On that page, there are links where you can actually access my calendar and just book a time that works for you so that we don’t have to play phone tag. I will make sure to put all of that information, along with also a link to an article that we wrote about this onboarding process I described at that iwcpro.com/revolution that I mentioned.

Joel: Awesome. Of course, if you’re listening to this, just below this in the description, you can find that link there as well. Once again, Kevin, thank you so much for taking the time. I do appreciate it. Have a great day everybody. Thanks for listening.

Kevin: Thanks so much, everyone. And thank you, Joel. We really appreciate it.

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