By CYRIL TUOHY, managing editor of Risk & InsuranceŽ
CHICAGO---The best way for workers' compensation and disability managers to navigate through the difficult economy is to present workers' comp and disability departments as a profit center, according to workers' comp and disability expert Richard Pimentel.
Workers' comp managers need to focus on reducing their reserves to help their firms capture larger credit lines, a move which chief financial officers are bound to welcome in times when banks are stingy about lending money.
"If you're a disability manager, look at your credit and how the workers' comp liabilities affect the credit situation and their effect on cash flow," said Pimentel, senior partner with Milt Wright & Associates Inc., speaking Wednesday to an audience at the Annual National Workers' Compensation and Disability ConferenceŽ & Expo in Chicago.
"You want to go to the CEO and say, 'We can free money up to use for operating capital,' " said Pimentel. "That argument is a good argument for those people that understand it."
"If you want to secure and ensure support for your program, you have to appeal to the current needs of the corporation; otherwise, you will be a worthy program not being funded," Pimentel continued. "We have to stop being a program that saves money and present ourselves as a program that makes money and provides income that corporations can use."
Another strategy comp and disability managers can use is to turn indemnity claims into medical-only claims to reduce the medical only-to-indemnity claims ratio.
The easiest way to do that, said Pimentel, is to get more information to doctors faster, even if that means managers should take it upon themselves to transport injured workers to the doctor or the hospital.
An aggressive return-to-work program, Pimentel also said, is the best way to limit reserves for new claims, and to reduce the reserves on older, high-dollar claims. The idea, once again, is for comp and disability managers to show CEOs and CFOs that their comp and disability management programs are helping to release working capital corporations can use now.
These measures are important, said Pimentel, because even the best comp and disability managers in the industry are being laid off.
"These tough times have been tough on everybody but more and more I have good friends--disability mangers in corporations--call me and say they are cutting me back," said Pimentel.
Pimentel ended his session on a cautionary note of a "brilliant and hard-working" return-to-work manager who, a few years ago, helped his company release $2.5 million in credit lines.
The manager was called a hero within the walls of his employer and bestowed every accolade in the book. Awards, plaques and trophies poured in from all corners. He was even given a raise.
Last year, the company gave the manager the boot.
"This grieves me," said Pimentel. "They are the top people I've ever seen, so I want to give you ways on how companies survive in tough times. I want you to see what you do as an income source of the companies."
Then he added: "Saving on workers' comp costs isn't going to ring anyone's chimes anymore."
(Click here to read all of our other coverage from the
Annual National Workers' Compensation and Disability ConferenceŽ
November 18, 2009
Copyright 2009© LRP Publications