Education Strategy Propels Workers’ Comp Agency’s Growth in Down Economy

By | May 18, 2009

While the economy is in freefall, a Sioux Falls, S.D., workers’ compensation agency, Insurance Specialty Group, is racking up double-digit growth.

According to owner Renae Eidenshink, the reason for this remarkable record is simply that the agency focuses on education rather than sales. “Sales become easy if you begin with education,” notes Eidenshink, who has more than 20 years experience in the insurance industry.

In 2005, Eidenshink became a Certified WorkComp Advisor (CWCA) after intensive training by the Institute of Work Comp Professionals (IWCP). As a CWCA, she became skilled analyzing workers’ comp accounts, identifying errors and overcharges, and developing strategies to help employers reduce their workers’ comp costs permanently.

However, she pointed out that the ability to leverage this knowledge to build her business did not really become clear until she was re-certified by the Institute three years later. It was then that she formed an affiliate company, Alternative Comp and Employment Solutions (ACES) to brand the WorkComp program.

While an important part of the program involves identifying errors and overcharges that are commonplace in workers’ compensation accounts, Eidenshink saw opportunity in educating her clients and developed a program, “Reduce Labor Cost by Helping Business Owners Become More Productive and Profitable.”

Building on the IWCP model, the program promotes workers’ compensation not as a product or commodity, but as a process that can reduce costs for employers over the long-term. The goal is to systemize businesses with the right processes and increase profitability and productivity.

The cornerstone of the program is understanding labor costs and helping clients better manage their labor force. In both good times and bad, healthy employee relationships are key drivers of profitability, and ACES works diligently with employers to strengthen their hiring practices, improve communication and training, and cultivate positive corporate cultures. With a focus on solving problems, the program fosters commitment and support from employees, thus maximizing productivity. Because of this approach, employers consider ACES a resource and are willing to pay for its services.

HR Consulting

During the recession, more clients have turned to ACES for consulting services related to human resources. Four hours a week or more can be devoted to helping clients with reductions in the workforce and guiding the termination process.

Knowing the laws and the impact that termination has on other employees, the staff provides employers with a roadmap for the proper procedures as well as supervisor training to cope with the effects of the reduction in workforce. In some cases, employers rely on ACES to manage the layoff process.

Coupled with this consultative service, ACES provides the tools employers need to systemize their businesses with the right processes to reduce labor costs. For example, the American Payroll Association estimates that hourly payroll is overstated by 3 percent. Recognizing the compounding effect of this overstatement in regard to federal and state unemployment and workers’ compensation, clients appreciate the value of proper time tracking systems.

In addition, the CWCAs work with employers to establish 24-hour injury response, proper claims management and monitoring, return-to-work programs, medical clinic relationships, nurse triage and supervisor training. The process involves much more than disseminating information; it requires a practical hands-on effort. For example, when setting up medical relationships, the staff takes the client with the job descriptions to the occupational medical clinic to review with the administrator. This practical approach means that services are customized to complement or enhance a client’s current loss-control procedures. Collectively these programs work to improve employee morale and control costs for the employer.

While employers may be reluctant to embrace this comprehensive approach in today’s economic climate, Eidenshink addresses this issue head-on with two creative practices. In 2005, she developed a pay-as-you-go workers’ compensation program and after three years, has four carriers that support the program with their underwriting and technology. Business owners have the option of purchasing workers’ compensation with no money down and paying premiums on actual payroll with no audit.

ACES runs the payroll, an added revenue source, and pays the premium in arrears based on the prior month’s payroll. Employers find this service attractive because there is no upfront cost and they don’t have to wait for an audit to obtain the premium savings when there is a reduction in staff.

Second, not all programs are implemented at once. A quarterly calendar guides the business plan, and each quarter the employer receives new tools to help reduce labor costs. The gradual introduction allows the employer to assimilate the program and control costs, while providing a catalyst for future changes. Although each tool contributes to strengthening business practices and improving productivity, collectively the whole is greater than the sum of its parts augmenting the bottom line.

Marketing

Eidenshink promotes her agency’s program through seminars, radio programs and published articles. While CPAs, business attorneys and HR attorneys are a strong source of referrals, most of the prospects come from satisfied clients. “Few businesses understand the complexities of workers’ compensation, the importance of lowering their experience mod and the interrelationship between workers’ comp and sound business practices. Most think all they can do is shop for better rates, but that does nothing to control costs long-term,” Eidenshink said. “Once a business has been in our program they experience the value of focusing on risk and claims management rather than policy shopping.”

Recently one manufacturing client that entered the program with a relatively high experience mod saw a 40 percent drop in premium as a result of implementing the process. Success of the program is measured by the reduction in overall costs, the response of the clients and referrals from clients. While many clients are from labor-intensive fields such as manufacturing and contracting, the program benefits all types of businesses. Eidenshink said they have seen a spike in seasonal operations that value the pay-as-you-go approach and the guidance on hiring practices.

“When it comes to workers’ compensation, knowledge and education give us the competitive edge. IWCP provides the tools, the networks, connections and an Internet-based forum for ready access to experts throughout the country. On the forum, I get educated every day and leverage the knowledge to solve problems for my clients,” Eidenshink said.

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