Experience Matters

Toll Free: (855) 255-5353

Workers’ Comp Underwriting Philosophy as Partnership

An underwriting philosophy is the logical analysis of the principles and processes underlying the conduct, thought and knowledge used in selecting and assuming the risk of another party.

Philosophy attempts to draw unity from diversity. It attempts to deduce conclusions (leading to unity) based on overall observations, both direct and indirect (diversity). The unity we are attempting to achieve is profitable business. The diversity is all of the risks, which we, as a company, have the capacity and authority to assume. Selection is the key. Underwriting is a process of selection.

In a voluntary and competitive market, there will always be selection in insurance. The question is whether the selection will be done by the insurance company or by the insurance buyer. The two opposite poles in this continuum are selective underwriting vs. adverse selection. It is the job of the underwriter to select rather than be selected. By analogy, an underwriter is similar to a loan officer at a lending institution. There is nothing difficult about lending money (the assets of the company). The key is to make good loans: loans that will be paid back and at an adequate rate of return. An underwriter has the power and responsibility to use the assets of the company for the benefit of the stockholders and must think much like a loan officer to create, maintain and maximize the value of the company’s assets.

Insurance is a business based on the concept of “Utmost Good Faith” between the parties; this is the opposite of the “Caveat Emptor” (buyer beware) concept. This is particularly true of workers’ compensation where there are two beneficiaries to the agreement, the employer and the employee. Workers’ Compensation is one of the social programs that made our Free Enterprise System strong. In the 1920’s, when most states passed laws regarding workers’ compensation, it was agreed that these laws are beneficial to all parties. Employers could know the cost of labor, thereby allowing them the ability to manage their businesses and price their products with certainty and stability. Workers knew if an accident or illness did occur from their work, they would be able to receive benefits without filing suit against their employer and seeking relief in tort. This system bestows both rights and responsibilities on the parties to the agreement. It was intended to be a no-fault, non-adversarial system and to succeed it requires both parties to act with the utmost good faith.

The problem with workers’ compensation underwriting is relatively simple: How does an underwriter find employers whose employees do not get injured very often and that return to work well and quickly. Identifying a problem is much easier than solving it. The best service a business can provide is to solve a problem. Most of the problems with workers’ compensation are management problems, i.e. how the process is managed.
Businesses handle processes in different ways, some more effectively and efficiently than others. The processes used by some employer’s lead to superior results, i.e. fewer losses (frequency) and lesser losses (severity) as compared to the employers who have poorer loss histories. Process management flows from management attitudes. The way a manager faces a problem has much to do with their success in solving the problem. So, what needs to be looked for is a management attitude: one of partnership and cooperation. An underwriter needs to look for employers who understand human resource management and who care about their employees.

The best results in workers’ compensation come from risks that are self-insured for their workers’ compensation benefits. Why is this true? Management. Self-insurers manage the process differently.

Self-Insurers:

  1. have the most effective hiring and training systems
  2. immediately know when losses occur
  3. respond quickly to the needs of the injured employee
  4. direct the injured worker to appropriate medical care
  5. contact the injured employee’s family
  6. communicate with the employee
  7. immediately target a return to work date
  8. provide modified duty for the injured worker
  9. make prompt payment of indemnity benefits
  10. live up to their end of the bargain
  11. and see near immediate results of their actions.

If they do not do these things – they do not stay self-insured very long.

When asked what the problem’s with workers’ compensation is, an array of responses will follow: Many will say it is fraud, or benefit levels, or attorney involvement, high rates or rate inadequacy. Less than four percent of workers’ compensation claims are fraudulent and then to varying degrees. Attorney involvement is a good barometer of the health of a workers’ compensation environment.

Although certain states have a greater propensity for attorney involvement than others, the vast majority of injured employees get attorneys involved, not because they are out to get rich off “the system”, but because they simply do not know what to do. All they know is that they: have been injured on their job; cannot work; have not heard anything from their employer; are not getting paid, have bills to pay and mouths to feed; and are confused and unsure of their future.

These are symptoms of a failed system. The employer, even if not enlightened as to state-of-the-art human resource issues, has responsibilities to injured workers. The attitude of management sets the stage for everything that follows.

A good insurance carrier can change the focus of an employer from workers’ compensation being a financial obligation transaction and instead focus on the human event of an accident occurring to someone for whom they are responsible; then, everything else takes care of itself. This being the case, underwriting has much to do with determining management’s attitude toward their employees and how managers manage the process of avoiding costs associated with work related injuries and illnesses.

A good carrier with a good employer will continuously improve the effectiveness of risk management methods for determining and developing this attitude in all relationships. It is the administrator’s job to foster this attitude on the part of everyone involved in the workers’ compensation management system. The carrier’s job in risk selection is to identify the desired characteristics looked for in a risk and select those risks to write, rather than be selected by those that do not have the desired characteristics. Although an evolving process, there are certain traits a risk should possess that makes them more desirable; many of which are the same things listed above that self-insurer’s do. These are important criteria in the underwriting process.

A good carrier will assist with the education and awareness of effective methods and practices used by the better-managed employers. It is the good carrier’s job to assist their customers in the risk management process and to become an effective partner in workers’ compensation risk control. This can only be done with cooperative partners and that is what a good carrier looks for in their underwriting efforts: partners.

112 Responses

  2. After I originally left a comment I appear to have clicked on the -Notify me when new comments are added- checkbox and from now on each time a comment is added I receive four emails with the exact same comment. Is there a means you are able to remove me from that service? Thank you!} כנסו עכשיו

  3. After I originally left a comment I appear to have clicked on the -Notify me when new comments are added- checkbox and from now on each time a comment is added I receive four emails with the exact same comment. Is there a means you are able to remove me from that service? Thank you!} לאתר הבית

  5. Good day! Do you know if they make any plugins to assist
    with SEO? I’m trying to get my blog to rank for some targeted
    keywords but I’m not seeing very good success. If you know of any please share.
    Many thanks!

  7. Fine way of telling, and good post to take data concerning my presentation focus, which i am goingto present in institution of higher education.

  8. Hey there! I just wanted to ask if you ever have any trouble with
    hackers? My last blog (wordpress) was hacked and I ended up losing months of hard work due
    to no backup. Do you have any methods to stop hackers?

  9. You’ve made some really good points there. I checked on the web for additional information about the issue and foundmost people will go along with your views on this web site.

  10. Hi there, just became aware of your blog through Google, and found that it’s truly informative.I’m going to watch out for brussels. I’ll begrateful if you continue this in future. Lots of people will be benefited from your writing.Cheers!

  11. Nice post. I was checking continuously this weblog and
    I am inspired! Very useful information particularly the closing part
    🙂 I maintain such info a lot. I used to be seeking this particular information for a long time.
    Thank you and good luck.

  13. What’s Going down i am new to this, I stumbled upon this I have
    discovered It absolutely useful and it has
    aided me out loads. I hope to contribute & assist other customers like its helped me.

    Good job.

  14. Your mode of telling all in this paragraph is actually pleasant, every one be able to effortlessly
    be aware of it, Thanks a lot.

  16. Wow, fantastic blog layout! How long have you been blogging for?
    you made blogging look easy. The overall look of your site
    is great, as well as the content!

  17. Hey there, I think your website might be having browser compatibility issues.When I look at your website in Opera, it looks fine but when opening in InternetExplorer, it has some overlapping. I just wanted to give youa quick heads up! Other then that, wonderful blog!

  19. Hi there! This is my first visit to your blog!
    We are a collection of volunteers and starting a new initiative in a community in the same
    niche. Your blog provided us useful information to work
    on. You have done a wonderful job!

  20. I do not even know how I ended up here, but I thought this postwas good. I do not know who you are but certainly you are going to a famous blogger if you aren’t already? Cheers!

  21. Hello just wanted to give you a quick heads up. The text in your article seem
    to be running off the screen in Chrome. I’m not sure if this is a format issue or something to do
    with browser compatibility but I thought I’d post to let you
    know. The design and style look great though! Hope you get the problem solved soon. Kudos

  24. I was recommended this blog by my cousin. I’m no longer sure whether this post is written by way of him as nobody elseknow such certain approximately my difficulty.You are wonderful! Thanks!

  25. What’s up i am kavin, its my first occasion to commenting anyplace, when i read this post i thought i could also
    create comment due to this good piece of writing.

  27. We’re a group of volunteers and starting a new scheme in our community.Your web site provided us with valuable information to work on. You have performed a formidable processand our entire group shall be thankful to you.

  29. Your style is unique in comparison to other people I’ve read stuff from.Thank you for posting when you have the opportunity, GuessI’ll just bookmark this web site.

  33. My spouse and I stumbled over here coming from a different website and thought I may as well check things out.
    I like what I see so now i am following you. Look forward to looking into your web page yet again.

  35. Appreciating the time and effort you put into your blog and detailed information you offer.It’s awesome to come across a blog every once in a while that isn’t thesame outdated rehashed material. Excellent read! I’ve bookmarked your site and I’m including your RSSfeeds to my Google account.

  36. I think this is among the most significant info for me.
    And i’m glad reading your article. But wanna remark on some
    general things, The website style is great, the articles
    is really great : D. Good job, cheers

  37. I think that is one of the such a lot important information for
    me. And i am happy reading your article. However should statement on some
    general things, The site taste is ideal, the articles is actually excellent : D.
    Just right job, cheers

  38. Hello there! Would you mind if I share your blog with my facebook group?There’s a lot of folks that I think would really enjoy your content.Please let me know. Thanks

  39. Hello to every one, because I am truly eager of reading this website’s post to be updated on a
    regular basis. It includes good data.

  40. After checking out a handful of the blog articles on your website, I really appreciate your technique of writing a blog.
    I added it to my bookmark site list and will be checking back in the near future.
    Please visit my website as well and let me know how you feel.

  41. Cool blog! Is your theme custom made or did you download it from somewhere?
    A design like yours with a few simple tweeks would really make my blog jump out.
    Please let me know where you got your theme. With thanks

  42. I love what you guys tend to be up too. This type of clever work and reporting!

    Keep up the fantastic works guys I’ve included you guys to my blogroll.

  51. You’re so awesome! I don’t believe I have read a single thing like that before. So great to find someone with some original thoughts on this topic. Really.. thank you for starting this up. This website is something that is needed on the internet, someone with a little originality!

  58. This is really interesting, You’re a very skilled blogger. I’ve joined your feed and look forward to seeking more of your magnificent post. Also, I’ve shared your site in my social networks!

  61. You’re so awesome! I don’t believe I have read a single thing like that before. So great to find someone with some original thoughts on this topic. Really.. thank you for starting this up. This website is something that is needed on the internet, someone with a little originality!

  74. I’m often to blogging and i really appreciate your content. The article has actually peaks my interest. I’m going to bookmark your web site and maintain checking for brand spanking new information.

  81. For the reason that the admin of this site is working, no uncertainty very quickly it will be renowned, due to its quality contents.

  84. For the reason that the admin of this site is working, no uncertainty very quickly it will be renowned, due to its quality contents.

  87. I think the content you share is interesting, but for me there is still something missing, because the things discussed above are not important to talk about today.

  89. For the reason that the admin of this site is working, no uncertainty very quickly it will be renowned, due to its quality contents.

  95. naturally like your web site however you need to take a look at the spelling on several of your posts. A number of them are rife with spelling problems and I find it very bothersome to tell the truth on the other hand I will surely come again again.

  100. Hi there to all, for the reason that I am genuinely keen of reading this website’s post to be updated on a regular basis. It carries pleasant stuff.

  102. naturally like your web site however you need to take a look at the spelling on several of your posts. A number of them are rife with spelling problems and I find it very bothersome to tell the truth on the other hand I will surely come again again.

  106. Very well presented. Every quote was awesome and thanks for sharing the content. Keep sharing and keep motivating others.

  108. You’re so awesome! I don’t believe I have read a single thing like that before. So great to find someone with some original thoughts on this topic. Really.. thank you for starting this up. This website is something that is needed on the internet, someone with a little originality!

Leave a Reply

Your email address will not be published. Required fields are marked *

Toll Free: (855) 255-5353