The knowledge gap: many companies face an education gap in managing workers' compensation cases. (Property/Casualty: Loss/Risk Management Notes).

Risk management today increasingly requires a sophisticated financial background that enables managers to see the totality of risk and its implications for the entire organization. As companies reach into the financial world for people to fill this function, they often sacrifice knowledge of human resources and insurance fundamentals, especially management of workers' compensation cases.

Similarly, benefits managers sometimes handle workers' comp as an adjunct to their primary responsibilities. Business belt-tightening has pushed some people from other disciplines into risk management with little or no training.

All this has created an education gap that needs to be filled quickly. While a company's risk profile may look fine today, it can quickly deteriorate when managers knowledgeable about loss prevention and claim handling are replaced by those who lack these specific skills.

Knowing how to effectively implement a return-to-work program is important. To do so, a risk or benefits manager must plan for injuries and identify transitional employment opportunities before they are needed. This may involve shifting a worker into a totally new job, re-engineering a position, or even simply implementing a shortened workday. Laptop computers may make it possible for some workers to start productive labor at home, long before they are physically ready to come back to the workplace.

Most of us in the property/casualty industry have long recognized the value of return-to-work programs in shortening the period of recovery, improving the odds of a full return to the job and improving morale for the injured Worker and fellow employees. Those from other disciplines, though, may not immediately realize its importance in controlling hard and soft costs. They need to be educated to understand its value and how to implement such a program.

Subrogation is an increasingly important aspect of minimizing workers' comp loss costs by recovering part or all of the cost from a third party with some responsibility in the claim. This requires specialized training so important information is gathered from the start.

In most claims, preservation of evidence is important to determine the cause of the accident and prevent subsequent injuries. It takes on an added importance in claim subrogation. In an on-the-job accident involving equipment, for example, the equipment must be preserved and protected until expert witnesses on all sides of the claim can examine it. Often die equipment should be photographed shortly after the accident and before any repairs are made. An auto left to rust outside without being inspected to see if the brakes actually failed, or equipment sold before inspectors can determine whether a design flaw contributed to an accident, makes subrogation difficult and more costly. It also can greatly increase the cost of the claim to the company once the case is adjudicated.

Risk and benefits managers also need to know basic workers' comp law, which varies dramatically by state. For example, claims usually can be resolved faster and be more cost-effective by using predetermined medical services providers who understand the workers' comp system and the importance of a return-to-work program. Some state laws, though, prohibit a company from suggesting a particular provider to an injured worker, so risk managers need to know what they can and cannot do to further their aims in handling workers' comp claims.

Among the less intuitive aspects of risk management is the value of early reporting of workers' comp claims. The Hartford's research has shown that workers' comp claims reported a month after the injury ultimately cost an average of 45 % more than claims reported the next day.

Many companies realize the need to fill this education gap and are doing something about it. The Hartford's Specialty Risk Services' third-party administration subsidiary last year opened its internal training classes to clients. The response was so great that SRS is now offering classes on specific workers' comp issues especially for clients. Also, the emergency preparedness planning seminars by our loss control staff have been so popular we've added additional sessions to meet demand. And, of course, risk management organizations, including the Risk and Insurance Management Society, provide members with training to help them understand various aspects of claim handling.

Workers' comp costs continue to rise, which makes businesses even more willing to do whatever is necessary to reduce claims and claim costs. If we can help educate companies about how to keep those costs down, well be creating better risks--and that serves everyone's best interests.

Judy Blades, a Best's Review columnist, is senior executive vice president, property-casualty, The Hanford Financial Services Group Inc. She can be reached at [e-mail].