Tag Archives: Daycare Insurance

Proper Insurance Claims Follow Up Procedures Yield Big Dividends for Schools & Non Profits

If you read our first article in the series “Managing Insurance Claims First Reports Can Have Big Impact  for Schools  & Non Profits” then you know that it’s a two part process, “be prepared” and “follow up.” This article shares the concept of how important proper claims follow up is for all workers compensation insurance claims, and all general liability insurance claims.

WHY WORKERS COMPENSATION CLAIMS & GENERAL LIABILITY INSURANCE CLAIMS ARE DIFFERENT:

Unlike many other types of insurance claims, many liability and workers compensation claims can get larger with time. In industry parlance this is called Loss Development as the claim develops over time it tends to get larger as law suits, negotiations, cost of continual medical e.t.c. increase the ultimate insurance carrier payout over time. A property claim for a burned structure does not deviate as much outside perhaps loss to the business income.

Thus we typically refer to both Workers Compensation Insurance & General Liability Insurance as very expensive credit lines that carry a high interest rate, comp especially. Although the carrier pays the loss upfront, the insurance marketplace is very efficient in re-couping the money from the policy holders in the form of premium increases for 4 to 5 years upon each renewal which is essentially a charge back.

THE IMPORTANCE OF DEVELOPING A CLAIMS FOLLOW UP PROCEDURE FOR YOUR SCHOOL OR NON PROFIT:

You wouldn’t hand a stranger your school’s checkbook, sign the blank checks and forget about it! That’s absurd, yet that is exactly what most Non Profit Organizations, Private Schools, and Charter Schools do. That stranger is the claims adjuster.

If you have a set procedure in place of when to follow up , with whom to follow up, and questions to ask you can and will have an outsized impact on the ultimate payout of a claim. In one example our claims staff followed up with a client and asked if there were any alternative duties at their facility their injured worker could perform instead of sitting at home and collecting workers compensation benefits. They assigned this injured workers a file scanning project that enabled the worker to come back, and be productive saving the School close to $67,000 in additional workers compensation costs. This only happened because someone was involved, asked the right questions, and had taken corrective action.

The bottom line is it’s critical that someone in organization have a set follow up procedure in place so they can monitor and effect not just the claim value, but the ultimate cost to your organization.

Download our Free Claims Report Tool for both Workers Compensation & General Liability Insurance. Take back your check book, control and manage your costs as it’s ultimately your hard earned dollars at stake NOT the insurance companies.

Did You Know That Non Profits Can Avoid Unemployment Insurance?

In case you didn’t know, 501(c)(3) organizations are not obligated to pay unemployment taxes.  Non profit organizations typically are not aware of this option since the state unemployment office rarely provides this information. Nonprofits can choose to protect themselves by participating in a private unemployment trust such as The Nonprofit Trust. Funding unemployment obligations this way can help nonprofits substantially reduce their costs, especially if the organization has over $1,000,000 in payroll.

The option has existed since 1972 which was when nonprofits were required to provide unemployment benefits to their employees. They were given an option that the private sector does not have – Becoming a reimbursing employer.
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Lets go in to a bit more detail. The employee laid off from a reimbursing employer still files a claim at the unemployment office and still receives checks from the department. The difference is a reimbursing employer does not pay unemployment taxes, but instead reimburses the state for actual unemployment claims paid on their behalf.
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So the only change is in how the organization funds the benefit. Typically they fund it by paying the unemployment tax, but this is rarely the best way for a nonprofit organization to fund unemployment claims because of the following:
  1. Nonprofit employees often make less in wages yet nonprofit employers are still charged just as much, if not more, than private sector employers.
  2. Nonprofit employers tend to have more part-time labor which actually increases unemployment tax expenses.
  3. Nonprofits usually have lower unemployment claims than private sector employers.
Contact a Risk Advisor at Metropolitan Risk Advisory to get more information about the program as well as our other cost saving programs.
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The tax system as a whole has contributed to the problem because:
  1. Due to the economy, unemployment taxes increased in 29 states last year. (Increases were as high as 161% in certain states).
  2. Over 25 state unemployment departments are now insolvent and borrowing money from the Fed. just to pay claims, increasing the need to increase tax rates. This number is expected to climb to nearly 40 by the end of 2011!
  3. States are overpaying claims in error by more than $1,000,000,000 per year!, and the problem is increasing due to the sheer volume of claims being processed due to the economy.
The Nonprofit Trust, mentioned above, offers your clients a safe, secure and cost effective alternative to the unemployment tax system in every state. In addition to the savings, the Nonprofit Trust offers a variety of services not available through State Tax systems:
  1. Savings average between 40% and 50% EVERY year.
  2. Claims administration handles all communications with the unemployment office including initial notifications, claims protests, hearing representation, etc., reducing staff time spent on unemployment, driving claims costs down by winning more cases than employers do on their own (94% vs. less than 50% for employers) and by auditing every single claim processed, catching overpayments made by the states and they are corrected.
  3. Free Human Resources Hotline that assists with any type of HR issue, not just unemployment related issues, which can save the nonprofit time and money in getting the answer they need.
Contact a Risk Advisor at Metropolitan Risk Advisory  to get more information about the program as well as our other cost saving programs for non profits.