Richard Gergasko, CEO of workers’ compensation insurer, Texas Mutual Insurance Co., describes himself as an insurance geek. Trained as an actuary, he’s been involved in the insurance business for 30 years. With Texas Mutual since February 2013, Gergasko previously worked for SeaBright Insurance Co. in Seattle, Wash.
Here, Gergasko shares his views on the company, the Texas workers’ comp system and the importance of workplace safety.
Insurance Journal: How would you describe your experience at Texas Mutual?
Gergasko: It’s been a very rewarding experience. My job in Seattle was eliminated through an acquisition and I’d heard about the Texas Mutual CEO position opening from a colleague. I just jumped at it largely because I knew how good a company it was, how well-run it was. We tried to compete against them when I was at my former employer. I heard great things from the agents about the company.
When I got here, I found that all that was true. I was fully embraced by the management team, which helped tremendously with my onboarding and transitioning to the company.
The employees are dedicated to our mission. As a workers’ comp company, really our mission is twofold. One is to do whatever we can to prevent workplace injuries. Two, when they do occur, they just get on board and really help that injured worker or the family of the injured worker. … The employees just buy into that mission.
IJ: The Texas workers’ compensation system is different than in most states. How has your experience been with it so far?
Gergasko: With workers’ compensation, when you’re injured on the job, you get medical treatment for life. You get your wages replaced until you reach what we refer to as maximum medical improvement.
In other states, what happens is on the medical side, you can actually settle with the injured worker upfront for a flat dollar amount. … The medical you settle on is intended to make them whole and at that point, they take care of their own medical treatment. ….
We can’t do that in Texas. In Texas, we have to keep the medical open. We continue to provide medical benefits to employees as long as their medical condition warrants it.
I was a little surprised by that. I had not realized that. I thought that was a bad thing at first. … What I’ve learned is it’s actually a positive. It keeps our costs down, because there are outside influences in that process.
For example, in other states, when you settle medical claims, there’s typically an attorney involved, and that attorney would take a fee for helping to settle that medical claim. By not settling here in Texas, we don’t have those kinds of fees that we would pay as well. We’re able to make sure that that injured worker has that money to pay for the medical claims in the future since we’re still there to pay for that treatment.
That’s been a positive. The Texas economy has been very strong and that certainly helps from a workers’ comp standpoint, because there are jobs that people can go back to. A strong economy is good for us, so that helps as well.
IJ: Are there any obstacles or areas of concern in the marketplace that you’d like to see changed?
Gergasko: Right now, no. What we’re experiencing, much like the national trends, we’re seeing a reduction in what we call frequency or the number of workplace accidents. That’s been going down for a number of years. The claim cost, the average claim costs have been fairly consistent. We monitor the trends … and the trending has been in the low single digits, which is better than the national average, I believe. Those are positive.
Competition is increasing a little bit. Right now, for insurance companies, Texas is a very positive environment. That brings other carriers in looking to write business. Even though competition’s picking up, what we’ve noticed is they really tend to be responsible competitors, pricing the business responsibly, which is what we like to see.
Then, from the employer perspective, it appears that rates are starting to flatten a little bit. We’ve had a number of years with rate increases and we’re not seeing the same need for rate increases in 2014. All the elements of the work comp environment right now look to be working well.
IJ: Texas Mutual is known for both safety and for intolerance, basically, for workers’ compensation fraud. In comparison to other companies, what would you say that Texas Mutual does differently?
Gergasko: On the fraud side, we have a dedicated fraud unit. We have a number of investigators. We really see different elements of frauds. … The first one you might think of is claimant fraud, where somebody says they got hurt on the job and they really haven’t. Or they did get hurt on the job, they’re collecting benefits, but they’re off working for another company or doing certain recreational activities that might be against what we think they can do based on their injury.
We have one unit focused on claimant fraud. We have a second unit that’s focused on premium fraud and that’s employers not reporting all their payroll. Then we have a third element which is the vendor side. Even some physicians will put in bills that may not be appropriate.
I think on the fraud piece, it’s our focus on having a unit dedicated to the fraud element. That’s all they do, that’s 100 percent what their job is. …
On the safety side, a lot of companies do a pretty good job with safety. … I give some kudos to our competitors when it comes to the safety piece.
Our real focus has been to really drive home that we are here to help the employers make the workplaces safe as possible. We have a number of tools. We have online tools. We have our safety professional staff that go out and meet with the employers.
We just opened up a service center approach, where employers can call in and ask for help. It’s just that total focused effort on safety from the top down, starting with me, that really differentiates us from some of our competitors.
IJ: When it comes to workers’ comp, what are some of the things that you personally are most interested in?
Gergasko: For me, it comes down to workplace safety above anything else. We see all the claims. I see all the severe injuries that get reported. It’s just unfortunate how somebody could take two seconds and just not think something through and it can change their lives forever.
The more we can educate people, in terms of what’s available. How they should be doing their jobs. How they should be responding when they get tired. How they make decisions on the job. …
We want to make sure our own employees are safe every day. We have a fleet of vehicles that some of our employers use, premium monitors or safety professionals. We hold them to very high standards when they’re operating a company vehicle.
We want to make sure that they’re not distracted. They’re not fatigued. They’re not using their cellphones while they’re moving, things like that. We practice what we preach with our own staff.
IJ: You have insureds that have operations outside of the state. Are you able to provide coverage outside of Texas?
Gergasko: We have a partnership with another carrier. What we do is, that carrier writes the coverage for the out-of-state exposures on their insurance policy, then we assume that exposure. It’s like a reinsurance arrangement. We’ll assume the premium and the losses that come along with that exposure.
Essentially the customer ends up with two insurance policies, one from Texas Mutual and a second one from our third party relationship. We can do it. It’s a little clunky, but some employers want to buy their product from just us, and that allows us to do that. ….
It’s not the Texas insurance code that prevents us from getting licensed it’s really the insurance code in the other states. I don’t know the exact wording, but it’s something to the effect that, because we are viewed as being linked to the state of Texas, because five of our board members were appointed by the governor, their statute prevents them from giving us a license in their state …
We currently have close to 60,000 policy holders, and they are our owners. Everything we do is for the benefit of that ownership population. The state does not have any hold on our money, on our surplus, nor do they have any responsibility for our liabilities. We really do operate as an independent company, subject to the conditions in the [Texas] statute.
Note: Listen to a podcast with Texas Mutual’s Richard Gergasko online at https://www.insurancejournal.tv/videos/11309/.