Traditionally, benefits and property and casualty have been treated as two completely unrelated practice areas. Individual agents tend to specialize in one or the other, and even full-service firms often use separate specialty teams.
However, there is a symbiotic relationship between these practice areas, and specific situations may give rise to interconnected property and casualty and employee benefits issues that are difficult to separate.
Consider this scenario: During standard operating hours, an obese, diabetic, long-term smoker drives a company vehicle to make sales calls. One day, the employee lapses into a diabetic coma on the way to visit a customer and crashes the company car into a building. Who is responsible for the damages to the building? Who is responsible for the salesman’s injuries from the wreck? Is this a workers compensation claim, or are the injuries covered by his group health coverage? These are just a few of the questions that will be raised or will need answers.
Understanding how clients manage their risk provides benefits agents with valuable insight on how to help a client handle benefits issues. It is important for agents to have not only a full understanding of their client’s approach to risk management, but also a familiarity with the specific areas that overlap, such as workers compensation coverage and administration, client loss experience and coverage related to safety and benefits plan administration.
Workers compensation is the most important form of coverage for benefits agents to understand. When an accident occurs, the first question asked is, “Was this work-related?” How this question is answered determines how the entire claim will be handled. If the accident is work-related and the company does not have workers compensation, it is important to know if the group health plan will cover it. In most instances, group health plans clearly exclude injuries that should be covered by workers compensation.
On the surface, an accident may appear to be work-related. However, various studies from the National Council on Compensation Insurance have shown that there is a direct correlation between work-related accidents and wellness, so the root cause of the accident might lie in previous decisions about the injured person’s personal health care. Unhealthy workers are more prone to work-related injuries because their ailments make it harder for them to function in a safe manner. For example, an obese worker who does not monitor his diet and never works out is more likely to suffer from sprains or strains from day-to-day job functions than someone who lives a healthier lifestyle.
By understanding this correlation, agents may help their clients invest in a wellness program that can ultimately result in reduced workers’ compensation costs.
How a client administers its workers compensation program can also provide predictive insights about how it can be expected to administer its benefits program. A client who changes workers compensation plans every year is likely to change benefits plans every year. Likewise, a client who uses cost as the primary selection criterion for a workers compensation plan will probably use the same criterion for selecting a benefits plan. It is hard for any plan to gain traction if it has to be retrenched each year.
Knowledge of a client’s risk experience modifier can also help benefits agents predict the habits of a client and indicate their plan preferences. This measurement is a ratio of workers compensation premium over losses. It is a snapshot of a loss experience taken over three years and can be a good indicator of a client’s attitude toward safety and wellness.
For instance, an employer that has consistently carried an experience modifier that is much higher than average likely has a less rigorous attitude about workplace loss prevention and mitigation–an attitude that could become obvious in the group health arena as well. The experience modifier is not a litmus test by any means but is one piece of information a benefits producer can and should use to gain a better understanding of the client and their desire to control healthcare-related costs.
Safety programs are another area benefits agents should become familiar with due to significant overlap with workers compensation, wellness programs and group health coverage issues. This familiarity can help agents identify opportunities to further educate employees about the importance of wellness. For example, to maintain Occupational Safety and Health Act compliance, employers must spend the time to train and educate their employees on safety procedures. Since there is a direct correlation between safety and wellness, this time could also be used to stress the importance of personal health and fitness.
Property and casualty insurance risk is clearly associated with benefits administration and legislation. In today’s highly regulated environment, a benefits plan extends beyond simple health and dental care payments. Benefit agents should understand the impact that proper plan administration has on the various forms of liability insurance. For example, an employer’s misunderstanding or failure to properly administer requirements of the Family and Medical Leave Act or Consolidate Omnibus Reconciliation Act can directly result in an employee benefits liability insurance claim–most likely brought to the employer’s attention by an attorney.
As plan administrators increasingly rely on the counsel of their benefits agents to help guide them through the maze of government regulations and plan options, it is imperative that agents have the knowledge and skills to look at the big picture to provide the best options that meet their clients’ specific needs.
Agents who possess a greater understanding of the direct correlations between property and casualty coverage and employee benefits will be much better positioned to serve their clients. Furthermore, the counsel they offer will be unique and comprehensive and ultimately have a greater impact on the client’s operations and employees. All that makes for a more valued agent, healthier employees, and a loyal insured.
Ryan Bowles is a vice president of the property-casualty group and Fred Pecina is a vice president of the employee benefit group at McQueary Henry Bowles Troy L.L.P., Dallas, an insurance and risk management firm. Ryan Bowles can be reached at [email protected] and Fred Pecina at [email protected].