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Solving a problem before it’s a problem

Insurance trades, blogs, and websites devote a great deal of space to addressing two critical issues related to the risks associated with writing workers' compensation policies: claims costs and medical fraud.

Image1Claimants may exaggerate their symptoms, file a non-work-related injury as a work-related injury, or falsify other material issues. On the treatment side, doctors, rehabilitation counselors, pharmacists, and chiropractors may provide unnecessary testing or treatment, bill for services not performed, or double dip by billing both the workers' compensation and health insurers for the same services.

All are highly troublesome, chronic, and costly problems that affect insurers and legitimate participants in the system. Quite appropriately, workers' compensation insurers spend time and money to try to prevent and root out claimant and medical provider fraud through dedicated Special Investigations Units (SIU). However, as valuable and necessary as those areas of focus are, there’s another one that gets much less attention: employer fraud and employer error.

Some employers knowingly make misrepresentations on the policy application by underreporting payroll or misclassifying employees for lower insurance premiums. They, or their agent, may provide inaccurate or incomplete information that skews a risk assessment. They may not volunteer information, such as OSHA violations, distance to the nearest medical facility, chemical purchases, and neighboring hazards.

Despite these risks, most insurers devote their resources to the back end of the problem, when a claim is filed, rather than at the front end when there’s an opportunity to reject coverage or price the policy more appropriately. Verisk’s Workers' Compensation Advantage Report can help identify risk from the very beginning, before the policy is underwritten.

The bottom line is that fraud and errors do not have to be mitigated at the point of a claim; they can be mitigated at the point of sale. Our Workers' Compensation Advantage Report helps solve that problem by painting a fuller picture of the business and property to reveal risk at the point of sale.

Sanford Brown

Sanford Brown is the director of product development at Verisk – insurance solutions.

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