When managing risk there are a number of areas to consider within a clients’ programme where value can either be added or created when managing, mitigating or transferring risk. Work Health Options (WHO) has had success with clients which can be seen in the following examples:
WHO achieved a successful outcome for a client that is a national furniture manufacturing company.
We had worked with our client and Agent in building enough evidence for WorkCover to proceed in the courts against the alleged injured worker for fraud.
The alleged injured worker lodged a claim with the employer stating that he had sustained an injury whilst at work when a staple hit him in the left eye. The worker made statements that his eye was normal before the alleged injury which had caused ulceration and has since caused blindness. Although the insurer had accepted the claim provisionally, discrepancies were found in relation to the actual reporting of the alleged injury and the diagnosed cause. Investigations were conducted to gather enough evidence to ultimately decline the claim and to build a strong enough case to hold up in the courts if the matter was disputed.
Reforms noted that all claims that had been successfully prosecuted for fraud since 1st January 2000, will be eligible to apply for a retrospective adjustment to their premiums. Based on this, WHO applied to WorkCover on behalf of the client, as the claim had ultimately had a maximum claim cost, which impacted against premium for 3 years. The application to WorkCover to have their premium retrospectively adjusted was approved and resulted in the client receiving a refund of approximately $230,000.
This outcome took 5 years to finalise and WHO staff worked continuously with WorkCover and the Agents’ fraud manager to exhaust all opportunities which lead to a successful result for our client.
WHO assisted a client that operates a national transport/logistic company in negotiating with QComp the appropriate classification for their QLD operation.
Just prior to renewal, WorkCover QLD conducted a random audit of their business to review the classifications. Based on their evidence through their own questioning, WorkCover QLD had applied to QComp to change their classification rate to a higher and more generic rate of Road Freight Transport. Based on their system of appeal we could not negotiate with WorkCover, who conducted the audit, but had to lodge a formal appeal to QComp direct.
The national team at WHO had to work quickly as 30 June was a month away and we didn’t want our client to incur the higher rate while the appeal was in process. We had lodged our appeal by explaining why we recommended the Road Freight Forwarding rate was more applicable to their business and also questioned the method in which WorkCover used to make their decision, as we felt it was not well-informed.
As WHO had a full understanding on how our clients’ business operates, we were able to explain this to QComp and point out the flaws in which WorkCover QLD failed to question about their business to make a fully informed decision.
Through countless phone calls and documentation we were successful in overturning the decision of WorkCover QLD applying the higher rate of Road Freight Transport and to apply the appropriate rate aligned with the business operation of Road Freight Forwarding, saving them incurring an increase of approximately $40,000 in premium.
Under the grouping provisions in NSW, WHO had a number of clients where the legislative requirements would have an impact. The initial reaction for these clients was to close down related companies and place all business under the one legal entity. The diverse nature of our clients in some instances meant the merging of up to 13 companies. Conversely we had clients that wanted to divide their operations, but did not know whether they should proceed with their restructure.
Our advice to clients was not to have a knee-jerk reaction, and allow us to look at the new provisions and their impact on the clients’ workers compensation programme.
After the provision of estimates for the upcoming 12 months we analysed the impact on premium under one company, as opposed to leaving the current structure in place, or we looked at the impact for those clients that wanted to divide their operation activities under new legal entities.
Our presentations to the clients outlined the savings should they remain as separate entities, and then weighed this against the cost of running each such entity. Our breakdown also highlighted safety nets which existed under the gazetted arrangements and the benefits these had to minimise the clients’ liability moving forward. With some clients it was the savings that assisted them with their decision, whilst with others it was the premium liability protection which influenced their outcomes. One of our clients in the steel manufacturing industry review their decision every year by providing the wages 6-8 weeks prior to renewal and utilising our advice on all alternatives available to them.
WHO constantly reviews claims and apart from assisting in the management of claims, we constantly provide all options available to the client from a financial perspective so they can make a comprehensive commercial decision. One of many examples in this area includes the review by one of our clients in the food manufacturing industry, who had the initial view not to offer suitable duties due to the cost of adding certain injured workers on their payroll for little return.
WHO actually analysed all of the financial estimates that all of their claims would be at time of renewal and projected both the renewal and adjustment premiums.
We then proceeded to provide a cost benefit analysis by calculating alternative reserves/wage costs for the same claims should the client return the injured workers on various hours. We utilised these cost saving strategies by re-calculating a number of savings in premiums and detailing all of these options accordingly.
By having all of the options on the table it enabled our client to be aware of all alternatives in order to make a commercial decision without receiving any surprises come adjustment and renewal time. The end result was that the client took on board our recommendations and saved approximately $85,000 on adjustment and $105,000 on renewal.
WHO has worked with clients on the structure in which they transfer their risk, either to the insurer, or to maintain it themselves'. The main options open to clients include:
- The conventional rates based on business activity and claims experience
- The conventional method with a built in Claims Experience Discount (CED)
- A Burning Cost Premium methodology and
WHO’s team has worked with a number of clients in various jurisdictions to ascertain which workers compensation programme structure will best protect their risk accordingly. Each option will have a crucial impact based on the clients risk management protocols, dynamic OHS processes, nature of their industry and claims as well as the structure of the business.
WHO negotiated a programme for a large transport company whereby a Burning Cost Model may well be to their advantage in 12 or 24 months’ time due to their commitment to work with us through a number of injury management and work health and safety management processes.
Although a number of insurers wanted to offer this programme as the basis of their terms, due to the clients culture, and lack of claims control reflected through the claims experience, we did not recommend this. WHO structured the insurance programme with a reasonable rate and incentive based by way of a Claims Experience Discount should certain KPIs be met.
Our strategy was to work with the client providing access to a burning cost structure, which lowers the minimum premium and allows premium to be based on the confidence to control claims through effective early intervention and return to work.
Although on paper the clients claims experience did not look impressive, we supplied a detailed analysis of the claims to insurers. This included the provision of a profile to support that there were a number of management and strategic actions that will mitigate the outstanding reserves on current claims and preventative measures to minimise future claims.
WHO also successfully negotiated the circumstances to exclude claims where recoveries were evident and hence should not be to the detriment of our client when calculating premiums on renewal.
The above standard business practice by WHO enabled us to place the risk, at what we thought was the appropriate premium rate, saving approximately $600,000. Today the account is running as anticipated and claims cost have decreased whilst increased recoveries have been negotiated. We have recently negotiated lower renewal terms which will place us in a stronger position next renewal, should the current early intervention and return to work support from WHO remain in place.