The workers’ compensation environment in California has been surprisingly stable over the last several years. Despite this stability, workers’ compensation remains one of the most complex exposures for employers. This study by Milliman’s Richard Lord and Stephen Koca and Keenan’s Bill Poland and Daniel Mattioli provides fundamental healthcare industry benchmarks from which informed decisions related to managing workers’ compensation in California can be made.
A thorough benchmarking study of an insurance program can highlight the value that comes from a sound risk management strategy and help lower an organization’s insurance costs. Richard Frese authored a new article in Risk Management magazine discussing the processes involved in conducting a benchmarking study.
Here is an excerpt:
A benchmark study is a valuable tool in a risk manager’s arsenal that can provide instant and proven benefits. By exposing the loss drivers, risk management will be able to prioritize short- and long-term goals as well as identify which types of claims or divisions to focus on first in order to have the most impact, promote greater safety and reduce costs. This detailed information will also serve as a basis for additional business intelligence about the program.
Even initial adverse results can create an opportunity by providing concrete information to support a request for additional funds to invest in risk management with the end goal of reducing total future losses. A cost-benefit analysis of a new safety initiative will determine how much the benchmark results improve.
While monitoring the cost per unit is important, risk management should also keep the total dollars in mind. Risk managers may want to share study results to revitalize emphasis in the insurance program among divisions, internal management, brokers and commercial insurers, which would each utilize the results differently. In addition, risk management may seek to use the benchmark results to achieve lower excess or reinsurance premiums, display significance to and connect with executive level management, and, most importantly, highlight and boost the value of their work.