Can
an employer paying large amounts in workers' compensation premiums determine
whether a particular type of injury is the cause of the expense? And
if he discovers the cause, can he do anything about it?
Fortunately,
there is computer software, which
can
assist
employers in finding
out the answers to the above questions.
For examples, one employer was able to discover the true
cost of group of back related losses by analyzing his situation through
this computerized method. What the computer report told
him was that if he eliminated 75 percent of all
back strain losses at a certain location, he could reduce his insurance costs
significantly. By analyzing his past losses, he
determined that back claims made up 16 percent of all past severity losses.
Through use of another software program, the
employer discovered that when the insurance company
paid $25,000 for a back strain claim, it cost him $66,902. When the employer
analyzed the situation further, he found that all back
related losses were being generated from one job activity. Armed with this
data, he could then determine his options and take
the necessary action. In this case, he decided to eliminate the human factor
and automated the task.
Workers'
compensation software has many applications and
can be used for various aspects of a firm's decision making process. For example,
dividend analysis software can highlight the best dividend
proposals
for the employer faced with
many different workers' compensation
proposals simultaneously.
Through the use of the program,
the decision maker can compare "apples to apples" when looking at retention
numbers, LCF's IBNR's, LDF's, as well as different
insurance company payout times and percentages. The
software can compare different proposal types, such as standard dividend plans,
cash flow plans and California retrospective rating
plans to determine their financial bottom line.
According to Michael G. Smart, president
of Smart-Comp Products, Inc., a newly formed insurance
software company based in Northern California, if an employer
want to forecast his next year's premium/experience modification,
he can use a particular program developed by Smart called Mod Calc.
Smart says that an employer who has knowledge of
this information can then proceed to "budget accurately. Further,
Smart points out, "Once the employer knows his premiums
and experience modification, he can also bid on contracts and plan his production
Using premium analysis
software, an employer can team
how past, present and future workers' compensation losses
relate to employer costs. If the employer relies
solely on loss runs, he may only learn the cost of a loss to the insurance
company whereas the software can show the true cost of
losses to the employer. Not only can actual experience
be analyzed, but the software can modify loss information and play
"what-if" to show what losses are cost the most money.
Smart notes that his
premium analysis software is "extremely
easy to use." He says, *The
user simply enters a few
easily obtainable insurance and financial variables and
Premium Analysis takes it from there, producing risk management
reports
and graphics from which a company can significantly
improve
their bottom line. He points out that the software is a "great
timesaver" in that it automatically shifts through nearly
20,000 calculations to produce the correct bottom line totals for each report.
Computer software and workers'
compensation decisions lend themselves to a long and lasting marriage because
the computer is the perfect tool from which financial insight can be gained
to make the most profitable decision for a company.
