Comp savvy

Rough Notes, Jun 1999 by Doucette, Nancy

Workers comp sales and service software offers agents a productivity tool that builds client loyalty and fends off competitors

ant to be a hero? Show your

commercial clients and prospects how they can control what for many of them is their second largest expense item-their workers compensation premium. And if that sounds far-fetched, how about using workers comp as the entree to an account? Smart-Comp workers compensation software can help agents make these seemingly unlikely events happen.

Time management gurus and efficiency experts have long touted the benefits of "working smarter, not harder." That's precisely what happens when agents use this product, according to Mary Murray vice president and trainer for SmartComp. Too often agents invest substantial time and energy in getting a good package premium, she points out, and they'll have to arm-wrestle with the underwriter again next year to reduce that premium still further. This process keeps the customer focused on price, not service.

Agents who use Smart-Comp take a different approach, she continues. They're able to educate the prospect or client on what workers comp really costs-by verifying the client's experience modification factor and quantifying the client's comp claims. "If the agent comes in with SmartComp and tracks the losses, determines the trends and where they're happening, the customer can save on comp costs. That's different from being able to offer a cheaper premium. Lowering comp costs has long-lasting effects."

Here's how it works

Step one is to be sure the agent understands the mechanics of workers comp. "It doesn't work like other insurance," Murray observes. As part of the on-site training option, she has stood in front of a roomful of insurance novices and first taught them workers comp, then trained them on the Smart-Comp software.

One of Murray's first lessons is on the impact of claims, especially frequent small claims, on the experience mod. She offers an example of a $500 claim for a cut finger. Sure the company pays that claim on behalf of the employer, but that amount is factored into the experience mod-and retained in that mod for the next three years. So that $500 cut finger winds up costing the employer $1,500.

Charlotte, North Carolina, agency principal Skip Knauff, of Knauff Insurance, Inc., Rough Notes marketing agency of the month for December 1998, provides his own version of "Workers Comp 101" to new clients and their employees. During his initial meetings with the employer he points out how proper safety programs can reduce losses. And when losses decrease, so does the experience mod. He illustrates his points with graphics he produces using Smart-Comp. He suggests channeling some of the freed-up dollars into an incentive program that will allow employees to enjoy the rewards associated with lower claims.

Next Knauff meets with the employees for their Workers Comp 101 session. "Basically it's an overview of what workers comp is and what it isn't. This is how you're protected, and this is what it costs your employer," he explains. "When the employees begin to understand how working safely and reducing claims can enhance their employer's bottom line-and how those savings are going to be shared with themthey're more likely to pitch in and work safer."

Being able to calculate and validate an experience mod for contractors or manufacturers is an important capability, Mary Murray observes, and Smart-Comp can do that. Many clients, particularly contractors, need to know what their mod will be in the coming year so they can build that expense into bids. If the client is a manufacturer and preparing to roll out a new product, this information will have to be built into the pricing structure for that product.

Smart-Comp also can verify that the mod supplied by NCCI is correct. Mistakes do happen, according to Steve Cockrell, claims manager for Redland & Associates, featured as Rough Notes' marketing agency of the month in April 1997. He recalls one extreme example where verifying the mod saved the client some $30,000. The account was an electrical contractor that had operations in some 32 states. When the agency began working on the workers comp portion of the account, they discovered their client was being charged for losses that belonged to another firm with the same name that was based in another part of the country.

Cockrell says he's also discovered instances where a loss is closed at one amount according to the agency's records but is still open at the higher reserved amount according to company records-again causing the mod to be higher than it should be.

To minimize these occurrences, Cockrell discusses claim status with the insurance companies well before the validation date when the NCCI calculates a firm's mod for the next policy period. Armed with the data generated by Smart-Comp, Cockrell works with the insurance companies to be sure the WC losses involving Redland & Associates' clients are in the best shape possible so they have the least impact on the clients' mods.