All Your Questions About Workers Comp Answered (Gavin Studner Pt. 1)

[ 00:00:35 ] Awesome, there we go! I'm just getting the Facebook Live started and we're live and up and running. Hey everyone, I'm Miriam Allred; Head of Partnerships at Careswitch. Welcome to Home Care U! Looks like we've got people populating into the room so hello and welcome if you're joining us for the first time, welcome to Home Care, U by Careswitch! If you have been with us before, attend this weekly, welcome back excited to have you excited to break down another really important topic with our guest here today. So, I also want to just say happy April; if it's spring where you are or almost spring where you are, I hope everyone's having a great start to their year and is also looking forward to another quarter, I can't even believe we're in April, but here we go.

[ 00:01:25 ] I hope everyone's keeping up with goals and resolutions and feeling good about this year so far. So, before I introduce today's guest, a few housekeeping items for everyone: We are in a Zoom webinar, we're also streaming live on Facebook, so hello everyone over there. Um, we've got already about 20 people here live with us today, so welcome! Um, engage with us in the chat - you know, look at the bottom of your Zoom bar, you'll see that there's a chat and there's a Q&A. Why don't everyone drop in there where they're Joining us from what city and state, you're in, and how long you've been in home care, I like to know how long all of you have been in business and kind of what you've been doing for the past year, and how long you've been in business and what stage you're at.

[ 00:02:05 ] It's fun for us to know that information so um, last thing I'll mention on housekeeping: whether you're joining us in Zoom or on Facebook, ask questions as we go. We've got an expert in the hot seat today, and he's here for a reason; he knows what he's talking about, he knows insurance, he knows workers comp which we're going to talk about today, so ask questions intermittently. And I will direct them to him, and we'll also save some time at the end to get into questions. So, without further ado, let's get started. Without further ado, today I'm joined by the lovely Gavin Studner. Gavin is a sales executive at Odell Studner Insurance Brokers and Consultants. Gavin, before we pick your brain today, tell me a little bit more about yourself, about your background, and your journey to home care.

[ 00:02:51 ] Alright, thank you very much. Happy to be here. Thank you, everybody, for joining on Facebook Live, Zoom, all the other platforms. It's a pleasure to be here. Um, a little bit about myself, uh, I, I would say I grew up in insurance, starting at as a wee toddler, I am a fourth-generation Um insurance broker, uh, we, uh, grew up outside of Philadelphia and somehow, I am still here. A huge Philadelphia Eagles fan for anybody else who's in Pennsylvania, I see we have somebody from York PA so we're representing well today. Just a quick background on who we are: we've been in business dating back to 1927 with my great-grandfather. We started with a small shop on and in a hundred years, almost 100 years, I've grown to almost 100 employees.

[ 00:03:38 ] We write over $450 million dollars in in premium for our clients and one of the largest regional and national insurance brokers in the nation. and uh what I do is home care all I do each and every day is temp staffing and home care companies so my job is understanding you know my client's business to help them not only from you know the exciting insurance aspect of things but also trying to find some unique opportunities for them to be able to be able to be able to be able to be able to be able to be able to be able to be able to be able to be able to be able to be able to be able to help them and their business grow uh obviously including one of them being care switch and what you guys bring to the table so I’m excited to be here I’m excited to be here with their care switch team And be able to offer any guidance and help that I can, awesome.

[ 00:04:17 ] Well, thanks for being here, Gavin, that's awesome. Fourth generation broker, I mean, that's probably a topic in and of itself, you know, just the family business and what that entails. Um, but we'll save that for another day. So, just to get everyone on the same page today, we are going to be talking about workers comp 101. So, we're going to start from ground zero, you know? The goal of today is to the word I want to use is demystify common questions and misunderstandings about workers' comp. I'll cite it first, but Gavin will probably also talk about this in that workers' comp. Is your second-largest expense in your home care business, second to payroll? So, I'll also say you know we're not talking about recruitment and retention and all the other flashy or buzzy topics at home care.

[ 00:05:04 ] We're talking about workers' comp, which on paper may be a little less interesting but knowing that it's the second largest expense in your business gives us the reason to have this conversation today. So those of you joining I'm preaching to the choir because you're here; but thank you for being here because this topic is equally important to the other topics that we often come across so Gavin, let's start from Zero what is workers comp 101 workers comp, what is the coverage and why does a business need it? Okay, starting from zero I'm going to start off with one quick thing before we start from zero, like negative two. Perfect you mentioned expert as much as I love to say the word 'expert', there is no such thing as 'expert' when it comes to insurance because it's so unique, uniquely nuanced in every state, in every county, in every territory; it changes, so I know there's going to be something for everybody out there.

[ 00:06:01 ] The word I'm going to use today a lot is 'it varies', and I apologize but it's just true. Workers’ compensation, you cannot just Paint a broad stroke and say it's all the same, but truly varies depending on where you are, your type of business, your size of your business, so I just want to add that little good caveat. So again, questions I'm all open for... well, I know specific territories or states I might not top my head, but we have people internally who do so now. I'll get to your questions, uh what is workers compensation? Workers’ compensation um is a statutory requirement for businesses to carry, which compensates employees who sustain John-related injuries or illnesses. It's no-fault, which means regardless of fault, it is up to the insurance carrier.

[ 00:06:50 ] to pay for the employee who is injured they may say they got injured on the job you may dispute it and say they did not but it's still a requirement for the insurance care to investigate or to pay out the claim so it is a requirement to have that now what is a pay for why does a business need it so it pays for four benefits four different categories of benefits you have your medical benefits which is pretty straightforward of what it is it's no limit on the medical benefits provided that's number one number two is loss of income to the employee for that job related injury or illness now that's based off of what The employee made while they were working and obviously the duration that they were out.

[ 00:07:36 ] Number three is Survivor or death benefits to a spouse, a family member, relative essentially loss of consortium for that employee being injured. And number four is rehabilitation benefits, trying to get the employee back to work any rehab procedures that they need to get them back to 100 where they were pre-injury. So that's what it is, um, and why you're required to have it. Awesome which is a great place to start I know that's maybe generic to some people but maybe not to others. And I'm also looking down because I'm taking notes so I can Like, keep up here, um, so with the caveat you know, you said it varies by state, which is true for most things, especially in home care. Um, does the coverage, you know, you just outline those four things?

[ 00:08:23 ] Does the coverage and the cost differ by state? The premium cost absolutely does. It absolutely does. So, I know you're in Idaho, so I'm going to use Idaho as an example. The insurance premiums that you're going to pay for workers' compensation in Idaho is going to be vastly different from the insurance premiums that some and a similar home care agency in Los Angeles County, California is going to pay. It's going to be a lot higher in Los Angeles. County than it will be in Boise, Idaho; um, similarly it's going to be different in Boise, Idaho, than it is down in Florida. Every state is unique in the States because of the claims payouts that change per state. Some states are more litigious than others.

[ 00:09:07 ] I'm not going to get into politics because I always love to avoid politics these days; but typically, the bluer the state which means some is going to be the more plaintiff-friendly state which means payouts for workers' compensation are going to be higher because of litigious costs. The redder the state, typically it's more uh defendant-friendly, so that costs aren't going to be as high if you want to think of it like kind of a map, the redder the state, the less premium you're going to pay compared to the bluer the state. Okay, just high level yeah. What other factors if you can share are there in thinking about the premiums? Like, cost of living, wage... Are there other factors that dictate that cost?

[ 00:09:51 ] Absolutely, well number one is the claims payout cost is going to be dependent on the wages that the employee earns. Um, you have the wages which is one part, you have the medical benefits which is another part, and again that's really territory-based um where they're going to get their injuries taken Care of are they going to a large hospital in a city, are they going to an urgent care up the street? So medical costs are going to depend on where those employees are going once, they're injured. Which leads to another pass, which I won't go down, but setting up a proper medical panel having a medical panel in place so that when employees get injured, they go to an urgent care instead of a very expensive Cedar Sinai's hospital in California is extremely important to lower those medical costs that you're going to incur on the employer side.

[ 00:10:40 ] So your carrier insurance carriers and paying as much out in insurance calls okay, that makes Sense and just, I'll insert this now: the importance of having a broker that knows home care. You know, a lot of people will turn to maybe local brokers that have a general knowledge of some of these principles, but knowing someone utilizing someone that knows the industry is extremely important in this case. Just speak to that, I know I'm talking about your business and what you do, but just speak to the importance of that, yeah. No, absolutely! First of all, I got into home care because I have a grandmother who has Parkinson's and she requires 24-hour care, so I saw the importance of what home care agencies provide to their clients.

[ 00:11:26 ] and I feel like in a way while I was kind of focused on the narrow insurance broker and going to the family business being able to help home care agency is kind of a passion of mine because I know the job that they're doing for their clients and it's how important it is so that's one aspect is this is a passion this isn't just placing business and calling it a day I know the more that I help my home care clients lower costs they're able to pass along you know that to giving the proper care to the clients from an insurance perspective yes having a broker who understands and is industry specific home care in this specific instance Is important understanding the insurance carriers in the game, who the best are, who the worst are, who the cheapest but why they're the cheapest, who the most expensive is and why they're the most expensive is extremely important in navigating where to place your workers compensation and how to handle claims.

[ 00:12:18 ] Yeah, great, great response, so I want to circle back a little bit to like how the premiums are calculated, I know that's what we were touching on, is there anything to break down so that an owner understands you know what they're paying into and what they're getting absolutely, absolutely, so let me first say this, so you Have monopolistic states and competitive states, and I know people are like well what is monopolistic States? I'll, I'll explain it so, you have four monopolistic states in the U.S we call them now - insurance North Dakota, North Dakota, Ohio, Washington, and Wyoming. And for those states, what it means is, you have a run workers compensation insurance program, you have to get workers compensation through the state, it is not competitive, there aren't insurance carriers who are going to you know write workers compensation in those four states, you have to go through the state to get work comp.

[ 00:13:13 ] Outside of those four, which is Where we focus, you 'have' you're in a competitive state, which means that carriers can buy for your business and of course, we live in a capitalist society so when carriers buy for your business it creates competition, which you know at the end the consumer benefits from success. So, you have carriers in those states buying for businesses, which is where you can really lower your costs now. How premiums are calculated plays into that. So, we're going to stick to three main parts of your workers' compensation: how they are calculated. You have the rates that are filed in those 46 other states, which plays into let me I realize the audience. I'm speaking to and we're doing 101 here, so I got to backtrack a little bit, that's great.

[ 00:14:03 ] So carriers file rates with their state and what rates are: it's you take your payroll times the rate that the carriers file with the state every year; it's a new rate, and that's how you spit out your premium that you're going to pay. Each carrier files a different rate with the state depending on the losses that they have, so they have their own actuaries in the background that determine okay, based off of our experience in this industry, this is the rate we're going to use for home care operators; this is the rate we're going to use for construction. Industry people, I don't do construction, so I don't know trucking people, manufacturing, distribution, so each carrier files their own rate, so that's how you determine what your premium is based off your payroll, your rate spits out your premium, that's the first line let me know if I'm going to detail or not because this is great, I nerd out, I nerd out over here,

[ 00:14:59 ] insurance side, no this is perfect, this is the detail we want to get into so owners understand you know the concepts here, okay all right because I can talk and I can nerd out all you want, I'm from Philadelphia like I said so we talk fast and we talk a lot, number two is your experience. Modification which we're going to talk about that's based off of your historical losses compared to your peers and I won't go into too much detail, but that's number two. And then number three is what's called scheduled debits and credits so while number one and number two are pretty straightforward, carriers file the rates, your experience mods your experience mod. Number three is a little more arbitrary, and where your broker can really step in and help negotiate debits and credits, vary by state but basically what it does is it helps a carrier either add premium or reduce your premium based off that as a final line item.

[ 00:15:47 ] In Pennsylvania, specifically because I know we have somebody in line from Pennsylvania, there's a 25 percent debit which means they'll add 25 more to the final line item premium or 25 credit, or they can reduce your final line-item cream by 25. And then there's play in between 25 and 25, so there's really a 50 swing in your workers compensation cost for Pennsylvania. California is actually even greater; it's over 25 each way, so it really depends on the state that you're in. But that third line item, the scheduled debits, and credits, is a huge one to determine what your final premium is going to be. And what we see is a lot of people Who come to us, they don't even realize they have a 25% debit on their line item, and they don't even know it or know what that means.

[ 00:16:38 ] That’s actually a $50 swing that they could be negotiating, or their broker should be negotiating for them. Well, let's dig in there; that's my initial thought is like what $50 is like a huge margin, so get into that, okay? Say, think of me as someone coming to you to like audit their insurance - I don't know if that's the correct like format here but they see that and what do you tell them what they can do and what can you do to change that margin for them. So, the first question is, do you know that? this is on there do you know what the do you know why you have it and the usual question is no let's start there where can someone go today to find that information second or third page of your policy depending on what carrier with, you will see a list of numbers and you will see something that says schedule, credit, debit, and then it'll have a percentage next to it.

[ 00:17:35 ] And that is your percentage. And then next to that percentage, there is an actual number that says the premium that you're paying because that schedule, debit, or the premium you're saving based off that scheduled credit. So, it'll say 20% credit, $4,000. That's how much you're saving with that. Great. Okay. I'm glad we got that out of the way. I mean, think of me like a brand-new owner that knows nothing about workers' comp. I am like absorbing all of this. And this may be repetitive for some, but like I like this amount of detail. Okay. So yeah, we got that out of the way. What next? Okay. What next? You mean like what can we do to negotiate that credit, what you would recommend? Yes. Say someone comes into you and they've got, yeah, that 25%.

[ 00:18:26 ] And. And you can help adjust or change that. What, what do you tell them? And then what do you do? Tell me about your operations. Why, why would you say that you don't deserve to be debited that 25%? What type of risk management do you have in-house? What type of, you know, safety programs do you have? Tell me why your agency is different from another agency in terms of safety for you, or employee, how you're interacting with your employees, is your turnover rate a lot lower than your peers in your county? Well, why is that? There's got to be a reason why you're retaining employees. And what we know from data is that when you have lower employee turnover, your workers' compensation costs are low.

[ 00:19:14 ] So, there's always a story to be told, but what we find is that a lot of the brokers up the street just submit accounts. So, they take, you know, Miriam's Home Care Agency, 100, and they take it, they write down the information they submit to the insurance carrier marketplace, and then they get numbers, but there's not a story told about why Miriam Home Care Agency, 100 is the best. Why are you so unique? Why is it that insurance carriers should look at your account and say, 'I really want to partner with this agency'? They deserve more credits than they do debits. There's always a story. It just, you have to take the time to understand the story. So, so that's.

[ 00:19:56 ] On the owner's part, explaining to the broker and then how the broker shares that information with the carriers dictates the rates, I guess this, this is new to me like there's some negotiation at play here of like explanation. And I like what you said like data like explaining your retention rates your safety procedures. To me if I'm understanding right like there's some play here that works to the owner's advantage if they can share this information. Absolutely. And you said it's on the employer to explain to the broker it's on the broker to ask the proper questions to the employer because they don't know what to ask or what to give. So yeah, it's, it's really asking the questions before we send a submission.

[ 00:20:43 ] It's we always write a one-page narrative on why this agency deserves to go with X, Y, Z insurance carrier, because they read that narrative. They understand the business. It's not just a piece of paper on there. On their desk, they get a lot of submissions. They get submissions from so many agencies that they just look at as, as numbers. But what makes an agency different is that first page of explaining why they're different. Okay. This is really good to know, which is back to the point of, I mean, maybe people that are listening in live can share some insights into your businesses so we can know, but it's, it's interesting in that if you worked with a broker, that's not familiar with this, this industry and this territory. Yeah.

[ 00:21:26 ] You know, you said it's on the broker to ask the questions, but if they're not familiar, you know, they don't know the question. So that's why we're here today, educating the owners so that, that they can bring these to attention to their brokers and tell that story and work down their rates, you know, like work down those percentages, which is money in the bank to these owners, which is really important. 100%. I, everybody on the call explained to your brokers while you're best in class, and you can just tell them all about your business and let them pick a part and then have them write the cover letter. Look at the cover letter. You can write the cover letter yourself if you like, and they can just forward it. Absolutely.

[ 00:22:08 ] And another thought that I'm having too, we may have some newer or startup owners on the line. This is really good to be aware of upfront, you know, thinking through your safety procedures and policies and how you communicate that and how you treat and train your employees, all of that factor factors into this cost. And this coverage. And so, bear that in mind as, as you're building these processes in your agency. Absolutely. Absolutely. A hundred percent. If you start from ground zero, it is so much easier than backtracking and it will not only save you a lot of time, but a lot of insurance dollars as well. Yeah, absolutely. So, let's, I'm, I'm taking us on a journey here, but let's get back to some of our prepped questions.

[ 00:22:51 ] Um, what is an experience modification? Okay. Love this question, get this a lot. Um, so simply speaking, your experience mod compares your workers' compensation claims, your history and workers' Compensation claims that you've had to other employers operating in your state, similar size, um, and the same type of business. So, you're not going to be thinking of it as a grouping with other home care agencies in your state, similar size, you're not grouped with manufacturing, distribution, trucking, whatever it may be. You're not going to be, you're not going to be, you're not going to be, you're not going to be, you're not going to be a co-owner, you're not going to be, you're not going to be, you're not going to be your employer. And unfortunately, this is just you compared to your peers. And what it does is it's kind of like a credit score. That's how I look at it. If you have a really good credit score, your cost experience mod is going to be lower.

[ 00:23:39 ] So your costs are going to be lower. If you have a bad credit score, they're going to probably be higher and therefore experience mod is going to be higher. So. When you think experience mod, think of it like your credit score for your business for workers compensation. compensation. And what it does is it provides the carrier to accrue the dollars they need to pay for your anticipated losses. So based off your historical losses, it allows them to say, okay, there's a formula behind it. It's very specific. I won't go into details because a lot of numbers and a lot of jargon, but it spits out a number based off your historical losses, your historical payroll, your class code, and tells you what your experience might be going forward so that the carrier can accrue for losses that they anticipate based off of your history.

[ 00:24:28 ] That's it in a very high-level nutshell. Now, what people on the call will see is that if they look at that same page that we discussed earlier, page two, page three, lists a lot of numbers, they'll see a line that says experience modification. Now, the baseline average is one. If you have a one, that means you are average. It's very rare you see a one mod. Exactly. But that means you're the average in your state, in your industry, and similar size. If you have above a one, so let's say you have a 1.1 or a 1.2, that means you're below average. So, you have a lower credit score. That means you're getting debited. So, you're paying more than your peers. So, it's a 1.1. That means you're paying an additional 10%.

[ 00:25:14 ] If it's a 1.2, you're paying additional 20%. So that's the negative side. So, look at your policy. Anything above a one, bad. We have to work on that. There are ways to work on that. Anything below a one, good. You're doing better than your peers. So, if it's a 0.8, that means you're saving 20% on your workers compensation cost because of your experience mod. It's a 0.7, 30%. So that in a nutshell is kind of how you compare yourself to your peers and how you're doing. It's just a good credit score. Okay, awesome. That's really interesting. And insightful. And I love that we're referencing people's policies so they can literally go and look at these numbers. And if they don't know what they mean, now they do. So, I love this amount of detail.

[ 00:26:02 ] You mentioned there's a lot of factors that go into experience modification. And we don't need to get into all of that. But give us maybe a little bit more of a sense of what they're factoring in and how an agency can influence those factors. Yeah, okay. So, number one, payroll. Basically, they need to see your, one of the calculations that's put into this formula is your input payroll, your size of your company. And number two is your losses. So, what's your total incurred losses that you have in a given year. That includes medical payouts, wage loss benefits, all those claims. And then number three, financial costs. Excuse me. So, you have those numerical numbers that get thrown in there. Excuse me.

[ 00:27:02 ] And then essentially what it does is it takes your actual losses divided by your expected losses, which gets you an experience mod at the end of it. Now, there are differences when it comes to frequency claims versus severity claims. And I don't want to dive too deep, but I will say that frequency is more of an issue when it comes to frequency claims. To come is your experience mod instead of severity. So, when we say frequency, we mean number of claims, while severity is how big a claim is. So, three claims that equal $20,000 each total $60,000 will affect your experience mod more than one claim that's $60,000. So, frequency plays more so than severity. So, when you talk about how you can really lower that experience mod and focus in, trying to lower your frequency is extremely important.

[ 00:27:54 ] And that goes into our other conversation that we'll talk about later as well, which is safety, risk management, loss control, creating that culture and environment for employees. Okay. Awesome. That was really useful. You know, even just covering like those two buckets of experience modification and how agencies like influence, obviously payroll is like dependent on your size and the number of employees you have. Like that's kind of like, it's like a lot of people are like, oh, I don't know. I don't know. I don't know. I don't know. But talking about like losses and claims, really useful, really useful. I just want to pause and say, we've got a good group here on the line. If you have more questions, don't hesitate to ask. I know that the first person to like to ask is always like a little bit intimidated, but we've got Gavin here.

[ 00:28:35 ] You know, he knows this stuff. So, if you've got specific questions, like fire away here in the chat, we want to hear them. So, if this feels like a good transition, let's talk about like auditing your workers comp policy. You know, say we've got, you know, you're in business and you've got a policy to kind of done the legwork. What if say someone on this call is listening to this and they're like, wow, I am a little, you know, out of whack with some of these numbers and need to be audited to make some improvements. What does that look like? So, this is really funny because one of the preps was what's the audit process for workers comp policy.

[ 00:29:17 ] And I was thinking in terms of audit, like at the end of the year where they care about auditing out, whether your payroll and premium is correct. That's where I was going with it, but you're going with auditing the actual policy, which is good too. So, let's hit both. Let's hit both. It's a both. Oh, wow. All right. We're really an insurance nerding out today. So, okay. So, let's start with your question, which was what can a home care agency do to kind of audit where they are? I would say the first thing is look at page two or page three, look to make sure, you know, your payroll is correct. Look at your experience mod, look at your scheduled credit or debit, see what that is.

[ 00:30:02 ] Really kind of just take a look and just become more familiar with it. A lot of insurance knowledge, a lot of agencies don't familiarize themselves with these pages. They just take it from their broker or sometimes they don't even see it from their broker. So if you don't have it, I would say request it and take a look at it and look at those numbers that we just spoke about and see where you are and see how you gauge yourself and have a conversation with your broker or engage another broker that you feel comfortable with to ask them, hey, take a look at this. What do you think about this? What are your thoughts? What are you seeing? That's a good way to audit it. But I would say first kind of look at it yourself.

[ 00:30:43 ] And to bring this full circle, the reason that you're looking at this is because you're looking at is money, is cost savings, bringing it full circle to where we started. Workers’ comp is your second largest expense. And if there's ways to save money first, just like Gavin said, education and understanding and getting out those policies and kind of getting them into the weeds yourself and then taking that to your broker and identifying where you can cut costs. So, I just want to reiterate that point throughout this conversation because owners are busy, and their priorities are scattered and they're taking care of themselves. And I think that's a good way to look at it. They're taking care of people and they're thinking through, you know, a hundred things a day. But our goal today is to kind of bump workers comp up on that priority list to A, educate and understand and then B, save money.

[ 00:31:29 ] So I'm hitting that hard, but I think it's really important and worth the while. Absolutely. I think it's worth it. I think it's worth it too. You're taking my lines. It's great. Second largest expense line. I love it. I'm creating another insurance nerd. Perfect. So, I'm just seeing this question from Bill, before we talk about like the other portion, which is like auditing at the end of the year, let's just see what he's saying. He said, when your business experience is a growth year, the insurance audit hits year-end due to higher payroll can be substantial. Is there a way to forecast this in the front of the year? So that's kind of getting into the secondary territory that we were talking about. So, I'll leave that to you, Gavin, to navigate where you want to take that.

[ 00:32:13 ] Bill, you just perfect segue into, the second part of that. So, thank you. Yes. So, backtracking there. Yes. There is an audit process at the end of the year. A lot of agencies aren't a fan of it, but essentially, it's a true-up. So, you estimate what your projected payroll is going to be for the following year. So, let's say your insurance policy renews on 4-1. You are estimated from 4-1-2023 to 4-1-2024. What's your payroll is going to be? So, your payroll is going to be your overhead. So basically, for the period of that year, you would be collecting on your payroll, which is a backup for that year. And typically, it's broken down what we call classification codes. So, you have your home care classification code, and then you have a clerical classification code, a salesperson classification code, et cetera. And your payroll is broken up that way.

[ 00:33:02 ] At the end of the year, the carrier comes in and they make; they audit your payroll to make sure that it's proper, you properly paid for the exposure that you had, whether your payroll was higher, if your payroll was lower. If your payroll ended up being higher, then you're going to go ahead and owe more money to the insurance carrier. If your payroll ended up being lower and you didn't hit those estimates you thought they were going to be, then the insurance carrier will return money to you because you didn't use money for your exposure that you had. So, Bill's question was about if you have a growth year, which is a great question because we do get this a lot because home care industry is booming. It's a much-needed industry.

[ 00:33:41 ] We all know that. So, it comes down to your broker asking the question, are you in growth mode? Are you in just a sustained mode? Or are you looking to kind of taper off? So specific to your question, Bill, you're in a growth year. So that helps a broker understand, okay, well, maybe instead of a year-end audit, we should do a monthly audit. Or a quarterly audit throughout the year so that at the end of the year, you're not hit with a huge audit because then you have a huge lump sum premium to pay because your payroll was not as high. Your estimated payroll wasn't as high as what it actually turned out to be. So, you may owe $20,000, $30,000 to the insurance carrier.

[ 00:34:27 ] And we know cash flow is really important for home care agencies. So, it starts with the question, what mode are you in? And if you're in growth, growth mode, you really want to look to maybe audit, maybe quarterly throughout the year so that you're accruing for those dollars. Awesome. Bill, great question, and great response. And that is so relevant to home care and to other industries as well. But like you said, there's a lot of fluctuation and there is a lot of growth. And I think of these newer agencies, even established agencies are oftentimes growing and growing for a period of time. It makes sense to me what you said in that if you can, you can do a monthly order or a quarterly audit so that it's not this like shock factor at the end of the year in accounting for what's happened.

[ 00:35:21 ] Absolutely. Especially when we talk about reimbursements. I mean, it takes months for reimbursements to come through for the waiver program. So, you really have to, that cash flow managing, that's really important. Yeah, absolutely. Well, great question. Bill, if you've got follow-up, let us know. I want to keep looking at the question. I'm going to keep looking at the question. I'm going to keep moving through some of these topics that I'm less familiar with, but are important, you know, subtopics here. So, talk to me about hard and soft market cycles in the insurance industry. Okay. I came prepared. Is it something, if you see me at a state conference or at the HCAOA conference, we have our, you know, little banner, Odell Studner, whatever it may be. I have this handy dandy little, little thing. I know you can't. It's a visual.

[ 00:36:09 ] It's even laminated, visual too. And we're in fancy over here. So, I know it's hard to see, and you might not be able to see our viewers at home, but you have an essentially what this is, it's a hard and soft market cycle. So, I'll just go through it just to kind of explain what it is at a high level. So, every six to seven years, we go through what's called a hard market cycle where insurance rates go up, and a soft market cycle where insurance rates go down. And some people ask, why is that? Why are there these hard and soft market cycles where insurance rates go up and down? Well, we live, like I said earlier, in a capitalist society. So, when you have more competition in the insurance marketplace, rates are going to go down.

[ 00:36:55 ] But then when you have less competition, rates are going to go up. So why is it that we have more competition some years and less competition other years? The reason is that insurance companies have to be profitable. They have shareholders to respond to. Their job is like casinos. They are there to make money. They're not there to lose money. So, what you have is during a hard market cycle, you have insurance carriers pulling out of industries. They have less capacity to write new business. So, you have less competition. So, insurance rates go up. Typically, that is six to seven years. And then when insurance rates get too high, carriers see, I don't know, opportunity to make money for their shareholders. They come into an industry because they think that they can make money there.

[ 00:37:38 ] And more competition means that you're now in a soft market cycle. More flexibility, more negotiation for brokers. Everybody's happy because brokers are giving, you know, lower premiums to their clients. Clients are happy because their rates are going down. It's fantastic. But that game comes to an end at some point. And then brokers are getting gray hairs because they're delivering bad news to their clients. So, you know, your next question was, was where are we in this cycle? We have, people aren't going to like this. We have been in a soft market cycle dating back to around 2010. This is the longest soft market cycle we have been in in workers' compensation history. It's been 12, well, 13 years that we've been in this cycle. By far the longest.

[ 00:38:29 ] And I said the average is six to seven years. And this is home. Is this home care specific, industry specific? This is home care specific. We track rates. This is for home care. We track on a state level rates year by year. So, we have, for some states dating back 2002, some states dating back 2008. California was really interesting where 2008 went up to, it was in a hard market, went up 2010 during the great recession. And then it's just been a complete downward trend. What we saw this year, and I'm sorry to say this, for some states is we see now a bottoming. Bottoming in workers' compensation rates after 13 years of a soft market where rates have gone down.

[ 00:39:10 ] It does not mean that in some states that you may not go down again this year, but typically California leads the charge when it comes to workers' compensation costs. What happens in California typically ripples across the rest of the US. So, we saw an uptick in California this year. We anticipate we're going to see uptick in other states this year. If not next year. And then, that will probably begin the beginning of a hard market cycle. Most likely, nothing's definitive, but most likely. So, what, this may seem dumb, but like, what does this translate to? What does this mean for owners? Higher costs. Higher costs means that there's going to be less competition from insurance carriers in the marketplace. It means that rates are going to go up.

[ 00:40:00 ] It means that home care agencies are going to go up. And then the other thing that we see is that companies who focus on risk management and safety for their employees, and who are communicating that to their brokers or directly to the insurance carrier, are considered what we call gold standard, are going to get more attention from the insurance marketplace. So really when you enter a hard market cycle, it's important to show why your 'gold standard', unique, best in class compared to your peers so that when an insurance carrier looks at your file, they're not just looking at another, you know, another hundred. They're looking at you. You stand out for a reason. They put a sticky note on you. Really useful information. I'm just like absorbing this like a sponge because this is not my territory of expertise. So really interesting.

[ 00:40:47 ] You're doing fantastic. This is really interesting. And I love the visual. Forget screen sharing. You know, forget the new model. Yeah. I love the traditional hold up the paper. That was amazing. This has been a really good start. I mean, we're 40 minutes in here, but I feel like we've covered so much, but we've still got a few more things to cover. One of those being claims, you know, let's get into a little bit more like tactful things and talk about the actual workers comp claims. What are the most common claims that you see? Yeah. So, if you live in the Northeast or Midwest, what we know a lot about is winter. Winter is not a fun season when it comes to workers' compensation claims. And that's because we have slips, trips, and falls.

[ 00:41:44 ] That is a big portion of claims that we see specifically in the Northeast, Midwest, and the winter season. I know I'm a little specific here. I'll make it broader in a second. But that is big for outside the home in the wintertime. Then you have slips, trips, and falls inside the house, which makes it extremely, home care is already extremely difficult when it comes to safety and risk management because your employees are out. They're not in the office. You don't have a manufacturing plant where you're seeing employees and you're creating a safe workplace environment. They're not onsite. They are out at home. They're in homes that sometimes you don't even tour or visit or know what to expect. They could have a rabid dog and you don't even know about it until the aid goes in.

[ 00:42:34 ] So slips, trips, falls is very, very big. Where we see the slips, trips, falls the most outside of the winter season is the bathroom. Obvious reasons. It's very wet in there. You're trying to help your client. It gets very difficult. You know, a wet floor. It's not easy. So, we see a lot of slips, trips, falls in the bathroom. And then I would say the other major one is back strains from lifting, which makes sense. You know, a lot of back strains, a lot of shoulder strains, neck strains. I would say that probably the back and slips, trips, falls are the biggest ones that we see. Okay. It's pretty common sense what you've shared, but it's just good to have it reiterated.

[ 00:43:23 ] Earlier you mentioned about severity and frequency and what we've just talked about, obviously probably checks the box on both, but particularly like the frequency, you know, those are the most common. What are some of the most common severe claims? And then, I don't know, maybe to add a little color, the most severe claim you've heard of or kind of out of the ordinary claim that someone wouldn't come across, if you want to share. You added a second one in there. I wasn't prepared for it. It's a good one. I'm putting on the spot. It's a good one. No, I like it. I'm seeing put on the spot. It's totally fine. So, the most severe claims fall into the most frequent claim as well, which is the back.

[ 00:44:05 ] I mean, the bending, the arching, the lifting, you find the most severe claims come from the back. And what we see is a lot of people, a lot of home care professionals already come in with back strains and issues prior to even working. And really, when you're lifting someone, it exacerbates that pain that they already had. And we know that the body is a human chain. When you're hurting in one area, it might affect another area. So, we have seen major issues when it comes to lifting clients' back pain, which leads to other pains in the body that sometimes have to lead to surgery. And surgery is the most extreme. It's the most expensive type of claims that you're going to have.

[ 00:44:54 ] And when you're dealing with surgery on the back or the spine or long rehabilitation treatment for the neck, you're getting into costly claims and long rehab times. Okay. Yeah, also kind of common knowledge here, but really good things to be aware of and to think about. And I don't know if this is maybe a good time to think about. How, I don't know if you feel comfortable sharing, you know, like you've said risk management, training, you've talked about these things. This is maybe one step outside of like your wheelhouse, but you talk to a lot of owners, and you know what they're doing or what they're not doing. So, what is some general or specific advice you would share on that front? So, there are a lot of things.

[ 00:45:45 ] There are definitely a lot of things. And look, I said, you can't be an expert in everything. You know, there's a reason why, and we have our own in-house loss control, in-house risk management, because those are professionals that operate solely in their respective divisions. So, I can tell you what I have learned from those experts in their divisions when it comes to home care. So properly training employees, when it comes to proper ergonomics, how to properly lift. We talk about back strains. Are you lifting from your back? You lifted from your knees. Are we the employer giving our employees back braces to help them? Are we giving them knee braces to help, you know, sustain their body? Are we providing shoes or recommendations on shoes, so they don't slip, trip or fall?

[ 00:46:31 ] Are we educating employees so that when they go into that bathroom, they are taking care of the client, but they're also looking at hazards. They're understanding, okay, well, we're on marble flooring. There's not a bathmat here, so it's going to probably get slippery coming out. So, we need to be a little more careful. Are there, you know, rails to hold on to for you to hold on to, the client to hold on to? Can we use a Hoyer lift? Is there a lift we can use for getting up the stairs? I could go on from the things that I have learned from our risk management department, and I can tell you that, when walking into a restaurant, I look at all the hazards. So, it's always in my head.

[ 00:47:11 ] So it's part of being in insurance, I guess. No, this is really, it's interesting. And my first thought was, we focus a lot on training for compliance, you know, like training oftentimes is a check the box. But the thing that stood out to me, you know, you said like shoe recommendations, you know, how many agencies are providing back braces or making shoe recommendations? You know, that's, you mentioned like gold standard. It seems extreme, but for this industry, those types of things are what are going to set you apart and what are going to keep your employees safe. And, you know, as the employer, you want to focus on these things and cover your own neck in that you said employees are out, you know, you're not seeing them and hearing them and understanding what's taking place minute by minute in these homes, but making a plan and policy, and then educating your employees and letting this like carry all the way through the process, you know, saves you money and keeps you safe.

[ 00:48:15 ] No, your business safe and your employees safe. I don't mean that. Yeah, lightly. So really good information. Absolutely. Everything you said is music to my ears. I'm kind of like getting goosebumps and excited right now because it's what you said is essentially it's an investment in your people by providing them, you know, safety, not only, you know, procedures to follow, but also maybe giving them back braces that don't cost that much money if you can get them in bulk. And let's just say it costs $1,000. And I know that that's a lot for some home care agencies because there's I get it. But at the end, it's going to actually pay out in your workers compensation costs because your experience mod is going to be lower. That scheduled credit is going to be higher.

[ 00:48:57 ] And if you're communicating what you're doing to the insurance company, then more insurance carriers are going to want to write your business. So essentially, if you're doing it, it could pay for itself. And then this is where the education comes in. That's why I love why we're having this conversation - it's things that are less top of mind, probably for owners, but are equally important for the business, the employee, and cost savings at the end of the day. So, it's all useful. And I like how we're kind of bringing it full circle and making it more personalized. You know, insurance can feel very out there. And it's just this thing that we're paying into and this thing that just kind of likes lives and grows.

[ 00:49:41 ] But thinking about, you know, the investments that you can make to cut costs, like I just love what you're saying. It's really interesting. So maybe two more questions. Audience, if you've got questions, throw them in. Now is the time. Two more that I want to probably end on. And you probably have a lot to share on these and we're getting them to an end. So, I apologize for that. Managing your workers comp cost. I know we talked a lot about cost at the beginning, but are there any other, kind of quick tips that owners can do to cut down on their costs? You said you like papers. And I, as you can tell from this, I love papers. I try to conserve as much as possible. We are moving our office to a bigger space.

[ 00:50:28 ] So this is like the moving period. But I have something right here that might be beneficial for anybody who wants some fun nightside reading. It's five steps for controlling workers' compensation costs. And it speaks exactly into your question: How can you manage your workers' compensation costs? So, send me the PDF after this so we can share the actual copy. But sure, talk through them. Done. Oh, done deal! I will do that. So, some things that are in here and some things that are not in here that I'm going to say as well. If you can get buy-in from management, what we call a zero-accident commitment policy, because management, safety really starts from the top. It really trickles down.

[ 00:51:11 ] If management can buy into developing a safe workplace culture, it really trickles down to the employee; honestly, employee satisfaction knowing that the employer cares about the employee. So having the CFO, the administrator, the HR director, whoever really handles the day-to-day workers' compensation, employee satisfaction, commit to a zero-accident policy, that is a fantastic start. And what we see is some administrators or owners do forever who's handling that zero-accident commitment; they get a bonus based off of how well they do in terms of claims and managing people and putting policies and procedures in force. It really kind of helps incentivize them to have development and develop this culture for years to come. So that zero-accident commitment is a big one for management.

[ 00:52:14 ] Number two is developed and implement a return-to-work program, which is a different article that I can give you that we have, which is a nice starter return to work program that you can have, but a return-to-work program for employees who receive approval from their position to return to the workplace or given light duty after being injured. What it does is it does a lot of things. It reduces your medical costs that the insurance carrier is going to pay out. So that automatically will help your experience modification, help your claims history. So, a light duty program, having that in place is extremely important. I mentioned it reduces your insurance costs. It promotes employee morale, meaning that you really care about the employee.

[ 00:53:00 ] And remember when an employee is out of work for workplace injury, they're only getting paid a percentage. So, they're not even getting their full wages, but having them back in the office and doing things, I say office for a reason, is actually a nice way to get them back involved and then back in the mindset of working. Whereas if they're home sitting on the couch, watching Netflix all day, there's not really an incentive to come back to work because they're actually enjoying this vacation time. So definitely trying to decide on what your light duty program could be. Some clients, especially when they're working, decide to do a light duty program where they're doing administrative work behind the desk at their home care agency.

[ 00:53:43 ] Other clients decide to put them in a room that does not have any windows and count paperclips and the employee gets so tired of counting paperclips that they want to get back to work. So, it really just depends on your agency and different options that can be put on that table to help depending on the injury. But you do want to take care of the employee at the end of the day. You want to have that culture. I love these examples. I didn't know where you were going to take this, but these are awesome examples of programs that you can build inside of your agency. And the thing that stood out to me most is culture. We talk a lot about workplace culture and culture in home care and building a healthy culture inside of these agencies.

[ 00:54:28 ] And I wouldn't have really tied insurance to culture, but I like how you just connected those two dots of building a culture of safety and building a culture that promotes workplace safety. And I like what you mentioned with the first concept of assigning ownership to someone. We talk a lot about KPIs and office staff and who owns what so that things don't get dropped. I think that's a great idea if it doesn't exist in your agency. Assigning ownership or a KPI is one of the most important things around this so that it's something that's maintained. Insurance is kind of or can be like a set it and forget it. Or training, we check that box, everyone's compliant, we're all good. But assigning ownership so that it stays top of mind, and you are maintaining the standard and that someone takes responsibility for that.

[ 00:55:30 ] 100%. We find that the agencies that grow the fastest and have the lowest insurance costs have that culture and mindset at the C-suite level of we care about our employees, and we have the culture behind, we implement a culture that is that we're a family and we're together. And they have a lower turnover rate, they have lower insurance costs, they have higher employee satisfaction. Like you said, insurance and culture, you don't really think about it, but it works hand in hand. We're covering all of the buzzy topics indirectly through insurance, which I love. This topic like we started out is not the most top of mind or the most talked about or the flashiest, but look at us, we're hitting on retention, we're hitting on culture, we're hitting on KPIs, we're hitting on data, we're hitting on all the other topics in the business and how insurance supplements or complements them.

[ 00:56:24 ] We've got a question in the chat, which is perfect as we wrap up. If the worker isn't an unsafe worker, why would it be a good idea to have the employee back? That's a really good question. And what would you say to that, Gavin? Love that. We have that question come up from home care agencies when we're in claims calls with insurance carriers. So, home care agencies, us as the broker and the insurance carrier. And sometimes the home care agency says, 'I don't want them to return to light duty work.' Insurance carrier wants them to return to light duty because the insurance costs go down. But the home care agency might not want them in the office because they might not have the proper culture to be in the office or the proper attitude.

[ 00:57:06 ] And they don't want that kind of seeping into the rest of the office environment. Absolutely, we get that 100%. You don't have to have them return to light duty. Depending, and I say depending on because it's a big word. You could talk to the insurance carrier about potential termination down the road now. You don't necessarily want to terminate during a claim because then that can lead to a lawsuit and things can trickle down. From there, but that's 100% of valid concern in a conversation that we recommend having with the insurance carrier when you have that type of employee that you don't want in an office environment or doing light duty work. Absolutely. Yeah, great. Yeah, glad we snuck that in there because that's very relevant to this business. Maybe they can have that paperclip job.

[ 00:57:52 ] In a dark room, no windows, and I can make them count paperclips. Yeah, we've got to find space for everyone. Yes. Which is great. Let's cap here. We've covered a lot of ground, and I am super pumped that you have followed along here because I'm throwing a lot of curve balls and taking you a lot of different directions. But let's end here. And I want to say thank you, everyone that's joining us live. We've got a good group on here. We hope this has been insightful to you and actionable. We have touched on a lot of things that you can actually physically go and do in your business today, which is what I love. And I'll just remind everyone that this is being recorded.

[ 00:58:36 ] So we will email out the recording in a podcast format so you can listen in and pause and play and move through this conversation so you can take action on these items. And Gavin, if you're willing to share some of these resources that you've held up today, we're happy to share those as well. Absolutely. Electronic is better than paper. So, I will send them electronically. Awesome. Well, that's great. And just a reminder to everyone here, we will be back with Gavin next week, same day, same time, to talk about other facets of insurance in your home care business. Today we wanted to do a deep dive on workers' comp, but next week we're going to get into the other insurance territories that your business needs to have and why. So, join us next week. Gavin, thanks for being here. And I'll look forward to connecting with you next week. Looking forward to it. Part two coming next week. Look forward to seeing everybody same time, same place. Awesome. Have a great day, everyone. We'll see you next week. Take care.