Insurance for Newbies 4/27/2015 - WASBO.com
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4/27/2015
Insurance for Newbies
Presented by:
Kathy Johnson
CSRM, WCS
Risk
Management
Strategies LLC
Table of Contents
Insurance Agents and Carriers
Workers’ Compensation
Liability
Property
Crime
Education & Resources
14/27/2015
Insurance Agents and Carriers
Limited Number of Carriers in WI
Not all Equal in Coverage, Services
Offered, and Cost
Claim Payment Philosophies may
Differ
Local Politics may Limit the Best
Choice. Educate your Board!
Workers’ Compensation Claims
Timelines Very Important
# Days for Employee to Report Injury
# Days for you to Report to Carrier
# Days of Waiting Period before
Employee Gets Paid for Time Off Work
# Days you have to Return Employee
to Work to Save Money
# Days Carrier has to Pay Employee for
Time off Work
Etc.
24/27/2015
Workers’ Compensation Premium
3 Factors in Premium Calculation-
Set by WI:
Rate for Employee Class Code (8868,
9101, 7380 and maybe 9428)
Experience Modification Factor
(Rolling 3-year Claims Experience
Modifier)
Payrolls by Class Code
Workers’ Compensation Dividend$
Dividend$ Paid by Carrier-Usually
Approved by Insurance Bd. of Directors
(Small Districts may get $0)
Carriers Review Loss Ratio (Premium
Versus Claims Paid) to Pay Dividend
• Lower Loss Ratio=Better Dividend (Usually)
• Variations: Flat, Sliding Scale or Combination
• Flat is Less Risky; Combination is Ideal
34/27/2015
Workers’ Compensation Basics
The Basics of Coverage & Benefits
Not Black & White Determination
Coverage & Service
Course & Scope of Employment
Date of Injury is Crucial
Types of “Benefits”
Workers’ Compensation “Benefits”
All Decisions Based on Medical Opinion
Medical Payments (Med Pay)
Temporary Total Disability (TTD)
Temporary Partial Disability (TPD)
Permanent Partial Disability (PPD)
Permanent Total Disability (PTD)
Death Benefits
44/27/2015
Benefits, in Detail--Generally
Med Pay: Medical Treatment, Appliances
& Supplies
TTD: Tax Free and 2/3 of Gross 52-Week
Average Weekly Wage (AWW)
TPD: Temporary Partial Payment from
Carrier for Earning Less than AWW
Workers’ Compensation “Benefits”
PPD: Payment for Permanent Impairment
from Injury
PTD: Lifetime Payments when Employee
can no Longer Work due to Injury
Death Benefits: Burial Expenses, Partial
Income Replacement to Dependents &
Carrier Payment to WI
54/27/2015
Money Saving Tips
Establish Culture of Safety & Early Return to Work
within Restrictions. Coordinate with Doctor
Maintain Close Contact with Employee and Require
Check-ins After Medical Appointments; Keep
Adjuster Informed
Accident Investigation may Uncover Surprises.
Keep your ear to the Ground
Money Saving Tips
Carriers set up “reserves” to pay claims. Accident
Details/Insight you Provide is Crucial for Accurate
Reserving
Require Reporting of Injuries within 24 Hours.
Either Signed Accident Report (NOT State Form)or
Call to Triage Reporting Service Provided by
Carrier/Agent
Let Carrier Know you Accommodate Restrictions
for Early Return to Work. TTD reserve reflective
64/27/2015
Money Saving Tips
Reserves Set Aside & Paid Out (Total Incurred) =
Experience Modification Factor Elements. Control
through Early Return to Work
Carrier Files Claim Stats to WI 6 months before
renewal. Recommend you Review all Open Claims
with Adjuster for Reductions in Reserves and File
Closures before 6 Month Stats Filings
Claim can be Reopened for 12 Years after Date of
Last Indemnity Payment. Be Aware of New
Injuries
Money Saving Tips
Employee can File for Hearing after Claim Denial,
so Carrier File Remains Open for Approx. 90 Days.
Keep Adjuster Apprised of Employee Intentions to
Close File at Earliest Opportunity
Early Return to Work within Accommodations
(Written Program Important, for Consistency and
Given WFEA Rulings)
Safety Committee Confidentially Discuss “Near
Misses”, Injuries and Prevention
74/27/2015
Recommendation
Recommendation: WASBO Offers The National Alliance
“Workers’ Compensation Specialist” Certification in
December.
How Can You Save More Money?
Discontinue Continuing Salaries While Disabled from
Work Injury. It reduces motivation to RTW
Disallow Using Sick Time in Lieu of Collecting
Carrier’s TTD Payments
Consider ALL Positions with Lighter Tasks, not Just
Jobs within Employee’s Department or Shift
Make Restricted Duty Offer in Writing with Details
84/27/2015
How Can You Save More Money?
Report Claims within 48 Hours. Late Reports Cost
Money:
Claims reported > 3 days after injury can add
16% to medical and 38% to indemnity costs
Claims reported >12 days after injury can
increase attorney involvement by 67% for medical
claims and 69% for indemnity claims
Liability
General (GL) and Auto Liability (AL)
Covers District’s Negligence for Bodily
Injury and Property Damage
Policies are “Occurrence” policies
Medical Payments Pays Medical Expenses
Regardless of District’s Negligence
94/27/2015
Liability
WI Statutory Caps on Limits Collectible
Per Cause of Action
$50,000 per claim for GL
$250,000 per claim for AL
Do you do your own bussing? Liability
exposure is more, even with “caps”
Surrounding States Don’t Have “Caps”
Saving Money on Liability Claims
When claim is reported, LISTEN. Don’t justify
or argue. Report to carrier – stay out of the
middle
Advise employees to only talk to your carrier
and get permission for any other interviews
from Administration
What is Said Can and WILL be Used Against
you School Board Legal Liability (SBLL/E&O)
104/27/2015
Saving Money on Liability Claims
SBLL Includes Personal Injury, Special Education,
Professional Error or Omission, and Sometimes,
Employment-Type Claims
Errors or Omissions: Failure to Use Due Care and
Degree of Skill Expected of a Professional in That
Profession
No “Caps”; Federal “Awards”
Policies not usually Occurrence;Often Claims-Made
School Board Legal Liability
Business office should be notified immediately
Notify Carrier Immediately
No one assigns issues to attorney without
business office/carrier permission
No Private Conversations with
Parents/Representatives of Student
114/27/2015
Property
Insures What You Own, Lease, or Have
Care/Custody/Control of by Written Agreement
Currently in Flux. LGPIF Seems to be Eliminated.
“Retail” Market is Very Different
Is There a Difference Between Policies? Yes!
ISO Property Policies vs Manuscripted. Be Sure
Exposures are Covered (Flood, Surface Water
Runoff, Extra Expense for Temporary Re-Location,
etc.)
Inland Marine
Contractors Equipment: Your Equipment—not the
Equipment of Contractors who Work for You
E.g., Snow Removal, Lawn Equipment, Sweepers,
Bobcats, Tractors, Self-Propelled ATVs, Forklifts, etc.
Special Portable Property: E.g.,Musical Instruments, A/V
Equip., Uniforms, Scientific Equipment, Costumes, etc.
Fine Arts: Paintings, Collections, Sculptures, Historical
Pieces, Rare Books, Antiques, Photos, etc.
124/27/2015
Crime
Employee Dishonesty: Employee Theft
Computer Fraud: Unauthorized Access to
Steal, Damage, Plant a Virus, etc.
Funds Transfer Fraud: Unauthorized Transfer
of Money Scheduled. Set up Procedures with
Bank
What are your checks and balances?
Crime
Depositors Forgery/Forgery & Alteration
Forging Signatures or Altering Checks
Monies & Securities
Burglary/theft on premises
Robbery off premises of cash, checks,
money orders.
134/27/2015
Education & Resources
WASBO
Conferences, Certified School Risk Manager
Designation, and Workers’ Compensation
Specialist Certification
Wisconsin School Safety Coordinators’
Association
Wisconsin Workers’ Compensation Act Available
from State of WI Publications
WI School Risk Management Cooperatives
Thank you for your Time and Attention.
www.RMStrategies.net
14Insurance for Newbies
Quick Reference
Presented by
Kathy Johnson, CSRM, WCS
Risk Management Strategies LLC
“Definitions” are sometimes “laymanized” for ease in understanding.
Workers Compensation – pays benefits for employees injured in COURSE and SCOPE of employment
1. Temporary Total Disability (TTD
Do you continue salary while employee is off work? Do you allow employee to take sick leave?
2. Permanent Partial Disability (PPD): permanent impairment, sometimes according to “schedule”
3. Medical Payments - All claim decisions are based on medical opinion. Do not assign for Independent
Medical Exam without carrier’s permission when a claim involved; generally, the State only allows one
IME and the carrier is in best position to choose the doctor and request a report so that it supports you.
Important to Note:
• Carriers set up “reserves” of how much they anticipate the claim will end up costing. What
information you provide is crucial. Does your carrier know you accommodate restrictions to return
an employee to early work? If so, their reserve for TTD should reflect it; inform the adjuster.
• If a claim is denied, employee can file for a hearing, so carriers leave claim open for
approximately 90 days, pending employee’s litigation. A claim can be reopened for 12 years from
date of last Indemnity payment.
• Claim reserves go into calculating your Experience Modification Factor. If your policy renews
7/1, your carrier files statistics to the State in January to report open and closed claim costs.
Review all open claims with adjuster in December for reductions in reserves and file closures.
• How is premium calculated? The State dictates calculation and carriers give dividends.
• What is Experience Mod (EM) versus Loss Ratio (LR)?
LR = the ratio of total incurred on claims versus premium paid. This is most important to carriers.
EM determines premium you pay and reflects losses, but not how much the carrier paid in claims
versus collected in premium.
Recommendation: WASBO offers Workers’ Compensation Specialist Course in December.
How can you save money? Implement these basics:
1. Early return to work within accommodations (written program important for consistency)
2. Safety Committee discusses injuries and prevention
3. Signed employee accident form or Triage Nursing Service for claims reporting
4. Accident investigation as soon as possible5. Report claims to carrier within 48-72 hours
Claim reported > 3 days after injury can add:
16% to medical costs and 38% to indemnity costs
Claim reported >12 days after injury can increase attorney involvement by 67% for
medical claims and 69% for indemnity claims
Liability Coverages: covers district’s negligence for bodily injury and property whether by General,
Auto, or Errors & Omissions (SBLL) Liability.
• General Liability covers exposures that are not auto and not School Board Legal (such as slip and
fall incidents which are most common). Coverage varies by carrier.
• Auto Liability covers anyone driving your owned or leased autos with your permission. Your
insurance is primary when they’re driving their own vehicle on behalf of the district business.
DPI regulations and Risk Management Best Practices dictate rules and limitations for who drives.
Always check driving records; District-provided vehicles where District has control is always best
for transporting; hiring a transportation service is second best; employee-owned/leased vehicle is
third best (you have checked out for driving record and background check if any possibility of
being alone with students). Any questions about suitable driving record/background check, check
with your agent/carrier or consultant. Avoid parents driving other students or students driving
each other. Not even a good idea to allow parent to transport own student due to District’s
responsibility for students at functions like sporting events, competitions, etc.
• SBLL coverage varies according to the carrier. Claims include errors or omissions for professional
liability when there’s a failure to use due care and the degree of skill expected of a professional in
that profession. E.g., IEPs, Board negligence, etc.
• What limits are adequate? What exposures are best to insure with highest limits?
State enacted laws to set “caps” on general liability and auto liability claims (general liability
$50,000 per action; auto liability $250,000 per person.
• Do you do your own bussing? Liability exposure is more, even with “caps”
• SBLL/E&O claims have no “caps: federal law makes settlement unlimited.
Saving money on Liability claims
1. When a claim is reported, just LISTEN. Don’t justify or argue. Stay out of the middle.
2. School Board Legal (E&O): business office should be notified immediately and no one assigning issues
to attorney without business office permission.
Property Insurance– insures what you own, lease, or have care/custody/control of by written agreement
• Is there a difference between policies? Currently in flux.
ISO forms versus manuscript such as Local Government Property Insurance Fund
• Extra Expense: extra expenses involved in getting set up temporarily after a loss until you are back
to pre-loss condition• Contractors Equipment: a misnomer: your equipment such as snow removal or lawn equipment,
not the equipment of any contractors who work for you.
Crime Insurance
• Employee Dishonesty: employee stealing. What are your checks and balances and how
frequently? Does same person review balances that signs checks?
• Forgery & Alteration – forging a signature or adding zeroes to a check
• Monies & Securities: burglary/theft on premises and robbery off premises of cash, checks, money
orders.
• Computer Fraud: Accessing without authorization the computer system and its programs, usually
to steal money, damage the network, obtain confidential information, or plant a virus.
• Funds Transfer Fraud: criminals set up an unauthorized transfer of funds to their account. Set up
system with bank for verbal approval for established amount, using a specific code or password
that cannot be hacked. Criminals can redirect phone lines and purport to be you.
Risk Management Recommendation: WASBO offers the Certified School Risk Manager national
designation, awarded by the National Alliance. This 5-part course taught by local instructors is very
helpful for helping you to know the questions to ask, at the very least. The Workers’ Compensation
Specialist course is a separate Certification from a one-day program.
Kathy Johnson, CSRM, WCS
Risk Management Strategies LLC
Madison, WI 53719
608-663-9032
kjohnson@rmstrategies.netYou can also read
