May 25, 2019

Archives for December 2008

Profiles in Professionalism: Interview with a Work Comp Claims Guru

As a periodic feature, the Claims Coach this month conducts an interview with w claims and risk management guru James Moore of J&L Risk Management of Raleigh, NC. Moore is the E.F. Hutton of workers compensation – when he talks, people listen! His website and blog are packed with insights and strategies for taming your claim costs in the realm of workers compensation. You can access these at http://www.cutcompcosts.com and his blog at http://www.cutcompcosts.com/www/blog.html. Let’s hear what Jim has to say on claim audits, workers compensation claim costs and the state of the claims profession.

Quinley: In doing claim audits, are there recurring issues or problems you see with claim-handling?

Jim Moore (JM): There are two that we see the most which heavily affect the outcome of a workers compensation file. Those two are Immediate First Contact and Poor Communications. Often we see where an adjuster writes the injured employee, employer, and treating physician a form letter and then documents that there was immediate three point contact. Talking with the employer, doctor, and employee about their workers compensation claim ASAP is a great way to start the proper communications in the file.

The other related area is adjusters working the file, but not making any contacts with all of the or at least some of the parties involved. Good communication is the main job of the adjuster. If this is not done as shown by a trend by an adjuster or by a TPA/Carrier, we become very concerned.

How should claims people prepare for an audit before undergoing one?

JM: Quit stressing when they hear their files are being audited. Some file audit firms consider a very nervous adjuster as a “red flag.” There is nothing that can be done to do a “quick-fix” on the files. The one thing that I recommend is to be friendly and smile at the initial meeting. Do not EVER put the auditor on the defensive if they ask you a question. Auditors that are on the defensive tend to be more subjective in their file appraisals.

What “red flags” do you look for when doing a claim audit?

JM: We do heavy statistical analysis on the 33 areas that we look at for trends. If there is a trend by adjuster or insurance carrier, then we red flag that one area. This happens very rarely except in one area. Over-reserving or under-reserving the files is a red flag that we notice very quickly. We do stat analysis to confirm our findings. The numbers speak the loudest.

Over the years, do you sense any differences in skill among the claims profession in general? Is claim service getting better or worse?

JM: Claims adjusting has followed a definite trend. It is how the industry or a certain carrier decides on the file loads for adjusters. An overloaded adjuster cannot do the job that the insureds are relying on them to do on their files. When the industry/carrier trend is to lighten loads, the file handling improves proportionally.

For a firm looking to tame its workers compensation claim costs, what is the ONE thing they can do to deliver the greatest return on investment?

JM: Time Management training pays big dividends. Stress management seminars seem to help. The old “claims roundtable” is also a great meeting to have for adjusters to discuss difficult files. We can tell the difference on file reviews between trained and untrained adjusting staffs. The one word is training.

How do workers compensation claims people avoid getting burned out?

(JM) They must remember that they ARE NOT claims adjusters. That is their job. In other words, leave it all at work. That is the secret to surviving in claims. Forget the files when you walk out the door every evening.

In a blind taste test, can you tell much of a quality difference between TPA claim services and insurer/staff claim services? Comment, please.

JM: Yes, when we compare files where a carrier also functions as a TPA. Flat-fee files seem to receive less attention.

If there is indeed a “brain drain” of seasoned claims people retiring, how can companies counteract that trend to salvage acceptable levels of expertise?

JM: There are carriers that do a great job of training incoming recruits. They also weed-out recruits that will not make it in the adjusting world. Liberty Mutual has an outstanding training program. Training and screening will fight the brain drain.

What are employers’ biggest complaints about workers compensation claim service?

JM: It is poor communications. They often do not know what is happening on their files. I always tell employers to request online claim access as they can follow the files without having to disturb the very busy adjusters.

What is the ideal caseload for an adjuster handling lost-time workers compensation files?

JM: Oh, this is a loaded question. It depends on the state, but I would say 100 for a claims trainee, 150 – 175 for an experienced adjuster, and 200-225 for a Senior Adjuster. In my career, I have had to handle 250 files in 7 jurisdictions/states. I juggled it very well until I burned out from fighting fires.

Solution to Claims “Brain Drain”? Likely NOT in New Tech Tools…

Don’t look now, but even insurance claim execs say they are worried about an imminent “brain drain” in the claims area. A recent Towers Perrin survey of P&C claim officers reveal that 82% feel that attracting and retaining top talent is the Number 1 priority for success in the claims industry (“Recruitment a Priority for Claims Officers: Survey,” Business Insurance, 3/24/08).

What to do? Interestingly, Towers Perrin concludes its study by urging insurers to deliver better outcomes via new technology. It does not exactly specify the nature of this “new technology” or how it can stem the incipient brain drain among seasoned claim professionals. Towers Perrin mentions better analytics as an example of the technology solution.Maybe I’m the only one curious and skeptical here. Towers Perrin cites high-level concerns over an exodus of claim expertise. Its solution is …. New technology.

Methinks this may have something to do with the fact that it’s easier for a consultant to sell “new technology” than to sell the ideas of: treat your claims people better, pay them more, enrich their jobs and institute better mentoring programs for younger adjusters with attractive career paths. The latter are squishier and take time to implement. They may not involve any whiz-bang technology.

A “brain drain” in the claims area is likely due to the graying of the workforce, job burnout, a sense of compromised career options and inadequate investment in mentoring, training and succession. The root cause of the claims brain drain does not (primarily) lie in technological factors. Even though selling tech solutions may yield higher margins for consultants, I don’t think technology – at least by itself — will solve the brain drain phenomenon in claims.

Your thoughts?

The Flip Side – Do Adjusters Make Good Lawyers?

How about the flip side – Do adjusters make good attorneys?

Some adjusters get bitten by the law “bug” when they work in claims. They may work with attorneys so closely they start to think, “Hey, I could do that!” I have known a few attorneys who started out as claim adjusters, went to law school, got their J.D. degree, passed the bar and then entered private practice. One down side is that this process may take a minimum of three years, maybe longer. There may be an opportunity cost to the adjuster-turned-law student in that while they are attending law school, they cannot maximize their earnings from being a claims adjuster.

Some adjusters are gnawed by the perceived lack of pay, prestige and cache that goes with being “just an adjuster.” They may romanticize the life of a lawyer (even if they don’t see days spent by associates in windowless conference rooms, tediously going through boxes of documents under the guise of production!).

On the other hand, adjusters are often used to handling high caseloads. Typically, they are no strangers to hard work or difficult clients. Having been a buyer of law firm services, they may have a better insight once they are a provider of law firm services and be that much more adept in meeting client needs.

So … what do YOU think? Do adjusters make good attorneys? Weigh in on the issue by taking our latest poll!

If Dems Win, Adjusters Can See Silver Lining in Resurgent Tort Bar

Today’s Wall Street Journal has an article (“Lawyers Aim to Roll Back Curbs on Lawsuits”) that addresses a theme the Claims Coach discussed a few weeks ago.
(http://online.wsj.com/article/SB122567159552291829.html)

It examines the implications of a prospective Democratic victory at the polls tomorrow. Apparently tort lawyers are licking their chops and refueling their Gulfstreams at the prospect of an Obama Administration. Financial contributions from law firms weigh heavily toward the Democratic side. Curbs on lawsuits, tort reforms, caps on recovery for non-economic damages, mandatory arbitration clauses in consumer agreements are all at risk.

Tort reform has not been a hot campaign topic in the McCain vs. Obama race. No surprise there. Amidst the panoply of more oppressing issues – the tanking economy being foremost – it’s hard to make any case for tort reform being a big deal.

Adjusters and claim professionals may lament the prospect of their jobs being rendered more challenging if the tort climate evolves into a more pro-plaintiff atmosphere.

On the other hand, to the extent there are more claims and loss severity grows due to changes in the legal environment, perhaps those factors will drive a stronger need for employing good claims talent.

Here lies a possible silver lining: whatever provides full employment for the plaintiff’s bar may as well provide full employment for claim professionals!

Steamed at Claimant’s Counsel? Write Right!

“That @#$# claimant attorney! And that ^&*% adjuster at XYZ Mutual!!!”

When writing to claimant/plaintiff counsel or to another insurer toward which your interests are adverse, strive to keep the tone both courteous and professional. Your relationship with the opposing attorney or carrier may impact the efficiency – and transaction cost (read: attorney fees) associated with the claim.

Cultivate a positive relationship that lets the claim develop with a focus on your insured’s or client’s interest, not the adjuster’s personality. While “chumminess” is unnecessary (and night be seen as unprofessional), cooperation and politeness will further the prompt resolution of the claim on its ,merits without the cost and headaches that policyholders can endure when adjusters needlessly spar or let their egos get the better of them.

The content of the adjuster’s communication to the opposing lawyer or insurer hinges on the purpose of the communication. A letter conveying a settlement offer has one tone. A letter responding to a deadline might have another. A message transmitting information should be concise and polite.

Never write a letter or email to the claimant/plaintiff attorney or to another insurer that you wouldn’t want a jury or the policyholder to see!

Will your claim file be the subject of the next consumer blog?

Time was you urged adjusters to consider the New York Times test in assessing their actions. You told them, don’t write anything in the claim file that you wouldn’t want to have on the front page of the morning New York Times. Don’t do anything you wouldn’t want reported in the New York Times, either.

That is still sound advice. In the Internet Age, though, it might bear some tweaking. Nowadays, if you shortchange a consumer – or (perhaps more importantly) – if a consumer thinks he or she has been mistreated by an adjuster, there’s a chance you could wind up as the subject of a blog.

Over the past month, the Claim Coach has seen at least a half dozen blogs fueled by steam coming out the ears of disgruntled policyholders and claimants. It has been said that nowadays the three most feared statements are,

“Here’s a letter from the IRS …”
“The doctor wants to discuss your test results ..” and
“Would you like to read my blog? …”

Many blogs are very specific in naming names, companies and excoriating claim practices. The Internet provides an electronic pulpit for disgruntled consumers to rant about how the adjuster never returns phone calls, wants to replace the quarter-panel with substandard parts or is balking at paying for smoke damage to the kitchen.

Have a good consumer experience and you may tell three other people. Get burned by a claim adjuster and you can let thousands know through the electronic bully pulpit of the blogosphere. This is an era where there are websites with URL’s such as www.dellsucks.com or www.ihatewalmart.com If you wanted to be famous on the web, I doubt that any adjuster, insurer or TPA had that in mind!

None of this is to inspire paranoia on the part of adjusters or their companies. If they are on solid ground, stick to their guns. It highlights the reality that companies, adjusters and an industry sector has a reputational risk at stake due to how we treat policyholders and claimants. If all your actions, inactions and statements were reported on the blogosphere, would you still feel comfortable?
Consider that as one yardstick for assessing your file-handling.

Adjuster fame through an irate consumer flame-job is no way to become well-known!

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