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Injury management cuts costs

THE recently announced workers’ compensation premium rate hike will pose a substantial challenge to employers. Employers face an average 34 per cent increase. Some industries will experience increases of more than 100 per cent.

And these premium rates are only a ‘guide’. Most insurers will also factor in their exposure to common law claims via the much publicised ‘second gateway’.

The defeat of the WA Government’s Trades and Labor Council and Chamber of Commerce and Industry-supported ‘second gateway’ amendments bodes ill for the bottom line of WA employers.

The ultimate concerns for management are financial.

Most employers are facing a serious and unpredictable erosion of profitability arising from a series of critical concerns including:

• The significant increase in present costs

• Increasing compensation payouts

• Unnecessary claims

• Unproductive wage costs

• Lack of knowledge

• Difficulty in gaining control

• Non-commercial claims management.

The key problem with non-commercial claims management is not treating this claims function as a business with objectives to achieve.

The more significant underlying problems are:

• Inadequate management awareness

• Poor communication and poor employee relations

• Ineffective coordination

• Passive approach to injury management.

Given an appreciation of how the employers’ profit and loss is being affected and some understanding of what is causing the problem, the following guidelines should be adopted:

• See it as a corporate issue, not just an insurance issue. It is an expense impacting the profit and loss – NOT a back room insurance matter

• Gain a big picture perspective. The concern is not just the premium rate for an insurance product but a series of triggers including workplace practice and environment, injury management, employee relations and risk financing. Employer concern has to embrace both operations and human resources – as both either hinder or help profit

• Seek outside help

• Understand it is like the tip of an iceberg – hidden flow on costs are substantial. The quicker employers come to grips with this the quicker they can take corrective action

• Develop an astute nose for savings and improvements. Identify crucial areas where savings and improvements can be made

• Improve your claims performance fast. Demonstrate improved performance to enable premium costs to be reduced

• Be serious about fixing the issue. This is likely to require a significant shift in attitude to employees and the seeking of creative options for getting people back to work. Changes must be made upstream in prevention and injury management if employers really intend achieving the best possible financial result.

For many years, employers have recognised the importance of injury prevention as a means to control workers’ compensation costs and now have strong occupational safety and health systems in place.

But few employers have embraced or fully understood the concept of injury management. It is in this area where significant savings are now being realised by proactive employers.

While a number of service providers such as insurers and insurance brokers purport to offer injury management as an additional service to clients, in the main all they offer is claims management.

Injury management is specific assistance to control injury and ultimately not rely on third parties such as rehabilitation providers on an ongoing basis.

Injury management is based on a program that is unique and effectively controls the three main areas of expense – common law costs, wages and vocational rehabilitation expenses.

Such a program is effective in controlling costs of common law and, as experience has shown over a four year period involving a large number of employers, many with employees numbering in the thousands, there has never been a common law claim against any of our clients.

The injury management program focuses on skilling employers in medical, rehabilitation, claims management and financial accountability.

Employers using the injury management program are experiencing 30 per cent to 60 per cent reductions in claims costs and are subsequently in a very strong negotiating position with insurers, even in the current market.

The only way ahead for any employer to control their workers’ compensation costs is with the adoption of a practical injury management program.

The overall effect on the employers’ bottom line will prove to be dramatic and profitable to both the employer and employee.

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