Training – The Hidden Risk to the Workers’ Comp Industry

This article was published by Robert Wilson, at
In Workers’ Comp Benchmarking Study – Fail to Train, Feel the Pain.

The article is based on data in Rising’s Benchmarking Study.  It is well written, and the interpretation of the numbers is accurate.  The state of the union for training in workers’ compensation is scary. Training is not funded or a priority in a vast majority of the claims operations.

Here is another factor to consider.

The boomers are going to be retiring soon. One third of the workforce will start coming out of the market. The ratio is HIGHER by far in the adjuster market. It is estimated 70% plus of adjusters are over 45 years old. The retirement ratio in insurance, and especially with adjusting, is going to be higher than the overall market.

Search for this topic and hundreds of studies and articles on the aging workforce in insurance are available. Training systems are going to be even more critical in order to maintain quality, control loss ratios, and reduce turnover.

Some payers are claiming the younger, inexperienced workers are already causing an increase in claims costs.

I’ve worked with many payers over the years. I once spoke to a CEO who looked like he was in shock. He had just run an exercise with all of his adjusters. He gave them all the same facts on a claim (patient age, job, injury, etc.) and asked them how to reserve the claim. He received numbers from $8,000 – $200,000 on the same claim with the same facts!

What did this mean to him? He had no idea how his company was doing. His financials were basically garbage. His pricing for clients for years was based on losses (adjuster reserving) that had no statistical consistency. He could be under or overpricing his product by huge amounts, and not know it.

As the study indicates, most adjusters have historically learned through “Tribal Knowledge” (fireside chat, learn on the job). This method will not work well when the experienced knowledge-base diminishes and the raw talent ratio increases.

What can payers do about this?  A few things:

Upgrade Processes and Systems:  Automation, efficiency and analytics are going to be critical. A large part of “training” is learning system “quirks” or manually learning something that can be done better, faster and cheaper by a computer. Focus adjuster staff on learning the stuff that requires nuanced thinking and expertise. In this manner, payers can reduce the required training and put information at the adjusters’ fingertips for easy access. New teammates can be effective more quickly. Analytics, alerts, dashboards, documentation and internal systems all play a part in increasing adjuster efficiency and quality.

Outsource to Good Partners: They can outsource certain areas to companies with good systems, training and culture that can handle the recruiting and training of talent in these areas better than they can. This allows payers to focus development in their key core competency areas.

Focus on Training: This is a no brainer.  No matter what else is done, the study clearly indicates a gap in this area that payers need to address.

Develop a Great Culture: One way to reduce the need for training (and the cost associated with training) is to reduce turnover.  Creating a place where people want to come to work and are able to be happy and successful, bends the turnover curve.  This makes training needs, and associated costs, more reasonable.

In fact, the industry’s turnover could serve a purpose if it forces us to upgrade our systems and processes. Any difficulty is an opportunity in disguise.