HOW TO BECOME A WORKERS COMPENSATION EXPERT
by Arthur Moll
You can become an expert in workers compensation if you possess two traits. These traits are a flair for mathematical relationships and patience. You must be able to combine these traits with a precious commodity called time, which very few agents possess. and, an almost equally precious attitude of perseverance.
Since you have mastered the many details of BOP, business interruption, SMP, BAP and CLM, here are the steps to follow to become a workers compensation expert.
First, you have to gather a library of appropriate materials so you will know where to find the answers to those tough questions from clients or employees (or even those you ask yourself from time to time). The following is a partial list of reference materials you need to master to call yourself an 'expert':
1. State or NCCI manual for Workers Compensation and Employers Liability Insurance
2. Various state supplements if you underwrite in several jurisdictions
3. Various Experience Rating and Retrospective Rating Manuals
4. Master Alphabetical Classification Index
5. Scopes
6. Various books on experience and retrospective rating
7. Premium Audit reference book
8. The statistical plan
9. A loss-control and safety handbook
After acquiring this costly collection you will have to become acquainted with the contents of each of the above reference works.
Here are a few of the concepts you will have to master: basic classifications, standard exceptions, general inclusions, general exclusions, classification wording, assignment of additional basic classification, payroll assignment, multiple classification, premium basis, premium discounts, special conditions or operations affecting coverage, subcontractors and admiralty law coverages.
After you have thoroughly read and mastered all of the reference material. You are ready to wrestle with a real life situation-the experience rating plan. This is not difficult, it just looks a bit complex. A good experience rating 'cookbook' will help you master the experience rating plan.
Now that you have mastered steps one and two and are already an expert at decoding loss runs, you are able to question the carrier(s) and the Rating Boards at the same time.
Here is where patience and perseverance is really required.
However, there are other areas of focus which are much more productive, and you can become a hero or heroine to your clients.
These are not necessarily in their order of importance:
1. Check your client's payroll allocations to assure that proper classifications are being adhered to and overtime bonus payments are excluded to assure in obtaining the lowest possible premium on audit.
2. Review claims runs regularly to satisfy yourself that the carrier is not over-reserving or that inactive claims are not carried forward from policy year to policy year. This must be done at least once a year approximately seven to eight months prior to inception date of renewal.
3. Review your clients' operations periodically to make sure there are no surprises when audits are done.
I believe that each of you can become a workers compensation expert. The mathematics is not all that difficult and the manuals are rather easy to use if you get past the feeling that they are cumbersome. All you really need is time.
Time is a precious commodity and it may be more economical to utilize the services of a consultant to assist you in protecting your present accounts or in obtaining new accounts. So if you have a pressing compensation problem, obtain the suggested library and follow the steps outlined above, or call a consultant.
Arthur I. Moll, CPCU, CLU, CIC, is a regular contributor to the Insurance Advocate, at (914) 699-2020, featuring his monthly column 'Views from the Bottom.' This article was reprinted with permission from the publisher.