Moore: 2024 Self-Insured Resolutions

Friday, January 12, 2024 | 0

These 2024 resolutions for self-insureds should start with examining the 2023 resolutions. Every year, we hear from the self-insured article and newsletter readers reminding me to update last year’s resolutions.

James Moore

The 2023 resolutions can be found here. Did you create a list and keep them? 

The dynamics of self-insurance change more slowly than other types of workers' comp insurance. Let us look at a summary of 2023 self-insured resolutions with my comments on any 2024 changes.

• You are paying directly from your budget. Nothing changed with this one for years. No cushion exists when compared to a voluntary market policy. Having immediate online access to your claims information remains critical. The self-insured account is always 100% funded directly out of company funds. Your organization is not outside the workers' comp system. Your company is more in it than other workers' comp insureds.
• Those festering medical-only claims usually turn out to be the worst. The pandemic effect is still in place. Injured workers understandably may have not sought treatment as much for minor claims. A quick informal conversation with even the workers who sustained very minor injuries may be worth the time investment. Check out this article on claims festering. If someone were to ask me what my biggest concern post-pandemic would be, the answer is claims festering due to nontreatment of minor claims carried over from 2021.
• Is your company still large enough in a state to justify self-insurance? Obtaining a voluntary market policy quote and possibly an alternative market insurance quote may be worth the effort for comparison purposes. Do not turn self-insurance into a vanity project.  
• Having a working relationship with your claims adjusters becomes a must from day one. See No. 1 above. With so many adjusters now operating remotely, a working relationship with your third-party administrator's claims adjusters may take more time. The number of an account’s claims adjusters may be more than in the past. File assignment may not come from a central claims office. Emailing them has been and will be the best way to contact them or provide them with claims information. The rate of adjuster turnover stayed at prior levels.
• Resetting your level of reinsurance can be tricky. In prior years, I had no solid recommendation on how to calculate the level of reinsurance you may require to be a “fully covered entity.” See the bonus suggestion below for a recommended conversation.
• Looking at other insurance markets. The alternatives to self-insurance have become a cottage industry of sorts. After the pandemic, this resolution does not seem to have changed other than the Fed rate that we all are having to deal with through 2023. Professional employer organizations have become a very viable option since the start of 2020.  es, PEOs consist of returning to more of a premium structure than resembling self-insurance.
• Intensify the use of my Six Keys. The keys have helped self-insureds very often over the last 20 years. You probably already know them. The keys have not changed since the 1980s.
• Medical networks become more critical to self-insured success over the years. Having an industrial-minded physician with a good bedside manner makes claims costs go down. Remember, you are spending directly out of a budgeted account. See this article about a Workers Compensation Research Institute webinar on access and time to first treatment. If I were going to highlight the one number in red that costs a self-insured program the most, this would be it. 
• Keep your C-level executive or company owners updated. This resolution becomes even more important in 2024. If you are working remotely at least part of the time, the task of updating the C-level executives may be neglected or delayed. Carbon copies of certain emails can keep them updated on the program.
• Watch the budget for allocated loss adjustment expenses that are not related directly to claims payments. This is still very important. ALAE  includes defense attorneys, medical bill processing and medical networks, to name a few providers in this category. We have seen sharp increases in this area in 2023.
• Bonus: Have a conversation with the actuary who sets your loss development factor. If you do not have an LDF calculated each year, your program is operating your budget without GPS (lost). Many self-insureds do not question or at least discuss their LDF other than looking at the actuary’s report.

I recommend that you first look at the 2022 self-insured resolutions. I know those are two years old, but they are more comprehensive and a good article for reference. The 2024 self-insured resolutions do have inflation as an unspoken heavy cost variable.

For a list of resolutions for the past 15 years, click here.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.