Aggressive Claims Handling – Brokers = Lower Premiums
By Robert Warne - December 26, 2003Three special interest groups are positioning themselves to protect their portion of the workers’ compensation pie by blaming high premiums on broker and agent commissions.
The California Medical Association (CMA) is pursuing legislation that would require carriers to open their books. Depending on the expenditures, the CMA is prepared to propose a cap on commissions, according to the Sacramento Business Journal.
The California Labor Federation also thinks millions can be saved if carriers cut commissions.
And in a round about way the California Applicant’s Attorneys Association has been pushing for more regulation on insurance pricing which would favor controls on broker commissions, the Journal reported.
Whether these three groups are onto something good or not is open for debate depending on who you talk to, but it is interesting to note that California’s newest work comp carrier, Employers Direct Insurance Co. has completely cut brokers out of the picture.
And although they don’t attribute their non-broker approach to their initial success in their first year of operation, they aren’t shy about sharing why they can offer an 8.2% premium rate decrease January 1, 2004.
Chief Financial Officer Ronald A. Groden said that Employers Direct can cut rates more than the industry average because its aggressive claims department will be better able to administer the new state regulations that go into effect in January 2004.
Additionally, the company has been able to select employers who share its vision that aggressive claims, loss and fraud management will drive down costs.
Employers Direct’s formula for success is definitely working in their favor at this time. But as far as the special interest low commission recipe goes, it appears that the three groups are eager to do what they can to protect their turf, which could be in legislative jeopardy in 2004.
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