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A Refresher on Workers' Compensation Claims-Related Fraud

Posted By Chris Prewit, Monday, February 26, 2018

By Samuel King, Vice President of Fraud Investigations, EMPLOYERS

In November 2017, Sam King, vice president of fraud investigations with EMPLOYERS (NYSE:EIG) presented a continuing education course to the Independent Insurance Agents of San Antonio on workers’ compensation insurance fraud. Following are key takeaways from the presentation and best practices for agents to help their clients start 2018 off strong and protect themselves from fraud.

What Are the Different Types of Fraud?

While most insurance claims are legitimate, studies indicate that 10 percent or more of all property/casualty insurance claims are fraudulent. In San Antonio, 1,624 workers’ compensation fraud cases were received by the Texas Department of Insurance in 2016. [1]

When it comes to workers’ compensation insurance, there are two different types of fraud that can directly impact businesses: “claim” related fraud and “policy” related fraud. Policy-related fraud occurs when either a policyholder or insurance agent misrepresents information about their business to obtain a workers’ compensation insurance policy or a policy at less than the appropriate cost. 

Claim-related fraud can be perpetrated by the claimant, a medical provider or vendor, or the policyholder during the workers’ compensation claim process. It frequently occurs when someone tries to gain a workers’ compensation insurance benefit by falsely stating that an injury or illness occurred at work, or by exaggerating an existing injury or illness.

While both types of fraud are serious crimes and can negatively impact the workers’ compensation system, more than one in 10 small-business owners are concerned an employee will commit claim-related fraud. [2]

Workers’ compensation claim-related fraud costs the workers’ compensation system billions of dollars every year and can lead to higher insurance costs for law-abiding businesses.

How Can Agents Help Policyholders?

By helping policyholders understand workers’ compensation claim-related fraud, including how to detect and prevent it, agents can provide a value-added service and ultimately strengthen their client relationships.

To educate policyholders, agents need to be aware of the warning signs of claim-related fraud, basic procedures for addressing it and the documentation required to report it to the proper authorities.

While there is no silver bullet when it comes to identifying claim-related workers’ compensation insurance fraud, there are patterns that can help spot fraud. Experience shows that when two or more of the following “red flags” are present in a workers’ compensation claim, there is a chance the claim may be fraudulent and the employer should notify the agent or carrier.

·        Monday morning (or start of shift) injury reports. The alleged injury occurs first thing on Monday morning, or the injury occurs late on Friday afternoon but is not reported until Monday.

·        Employment change. The reported accident occurs immediately before or after a strike, job termination, layoff, end of a big project, or the conclusion of seasonal work.

·        Suspicious providers. An employee’s medical providers or legal consultants have a history of handling suspicious claims, or the same doctors and lawyers are used by groups of claimants.

·        No witnesses. There are no witnesses to the accident and the employee’s own description does not logically support the cause of the injury.

·        Conflicting descriptions. The employee’s description of the accident conflicts with the medical history or injury report.

·        History of claims. The claimant has a history of suspicious or litigated claims.

·        Treatment is refused. The claimant refuses a diagnostic procedure to confirm the nature or extent of an injury.

·        Late reporting. The employee delays reporting the claim without a reasonable explanation.

·        Claimant is hard to reach. The claimant does not respond promptly to messages or claimant is hard to reach.

·        Changes. The claimant has a history of frequently changing physicians, addresses or jobs.

Suspicions of potential fraud should be reported immediately to the workers’ compensation insurance carrier or the Insurance Fraud Unit of the Texas Department of Insurance for further investigation. Policyholders should gather as much information as they can to support the claim, including identifying witnesses and misstatements. Additionally, they should get in touch with their workers’ compensation carrier’s claims department and special investigations unit or fraud investigation department so the carrier can begin investigating.

If the claim results in a criminal conviction, the insurance agent can help their client get the fraudulent claim, or the fraudulent portion of the claim, removed from the policyholder’s experience rating.

Workers’ compensation claim-related fraud can be a costly crime. By taking the time this year to remind policyholders of the “red flags” of workers’ compensation fraud and how to prevent it, agents can build a relationship with their clients and demonstrate the value they bring to the table.



[1] Texas Department of Insurance, Division of Workers’ Compensation Fraud Unit. Retrieved from: https://www.tdi.texas.gov/wc/smo/wcfraud.html

[2] EMPLOYERS, More than 1 in 10 Small Businesses are Concerned Their Employees Would Commit Workers’ Compensation Insurance Fraud, Study Finds. Retrieved from: https://blog.employers.com/EMPLOYERSBLOG/tabid/165/ArticleID/219/Default.aspx

 

Tags:  advice  best practices  fraud  Insurance  litigation  strategy 

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Bitcoin, Cryptocurrency and Blockchain

Posted By Chris Prewit, Tuesday, January 2, 2018

Article written by Robert Crosby, Executive Director of Independent Insurance Agents of San Antonio

Since this is the start of a new year, I wanted to write about something that has taken the nation and the world by storm. As I delved into the subject of Bitcoin, Cryptocurrency and Blockchain transactions, it became apparent became to me that there is a generational gap of understanding this new currency between the Millennials (Bulls) and Baby Boomers (Bears).

Let’s start with a history lesson.  Bitcoin is a new form of money, a digital currency created in 2008 during the financial crisis.  Blockchain is the tracking mechanism that facilitates any incoming and outgoing bitcoin transfers to and from any internet address at any given time.  During the financial crisis of 2008, people from all over the world felt its debilitating economic effect. As late as the end of 2016 and into 2017, many are still feeling the effects of the dwindling value of their fiat currency or the currency approved by a country’s government.   Satoshi Nakamoto, an unknown person or persons, created the bitcoin concept sometime in 2008.  A key component of bitcoin is decentralization. Decentralization allows us to cross currency barriers making us all a part of the bitcoin ecosystem.  This allows anyone, anywhere, to take part in transactions and contribute to it in our own way.  Rather than relying on a government, bank or middleman, bitcoin belongs to everyone in this “peer to peer” system, making all of us part of the bitcoin network. Bitcoin is driven by individual users and without individual users, there is no bitcoin. The more people that embrace bitcoin, the better it works.  Bitcoin needs an ever-expanding community actively using bitcoin as a payment method either buying goods and services with bitcoins or offering goods and services in exchange for bitcoin. Bitcoin can be used as an investment and traded like a commodity.

As I did a more in-depth analysis, I learned about some of the features and characteristics of bitcoin.   Bitcoin lets you exchange money in a different way than you would with a bank.  Bitcoin makes it possible to transfer value anywhere in the world via the internet in a very easy and quick way.  It allows you to control your money but it does come with great security concerns.  Bitcoin claims that it can provide very high levels of security if used correctly. Because of this, it is important for anyone interested in investing or utilizing bitcoin to take the time to inform yourself before using bitcoin for any transaction.  Bitcoin should be treated with the same care as your wallet, or even more so in same cases. Always remember that it is your responsibility to adapt good practices in order to protect your money. 

Bitcoin is treated as a commodity in the world market with the price of a single bitcoin unpredictably increasing or decreasing over a short period of time due to its young economy, novel nature and sometimes liquid markets. Consequently, keeping your savings with bitcoin is not recommended at this point.  Bitcoin should be seen like a high risk asset and you should never store money that you cannot afford to lose with bitcoin. If you do receive payment with bitcoin, many service providers can convert them to your local currency.

Here is a list of companies that accept Bitcoin. (Last updated on December 6, 2017)

Any transaction issued with bitcoin cannot be reversed.  A bitcoin transaction can only be refunded by the person receiving the funds. That means you should take care to do business with people and organizations that you trust, or that have an established reputation.

All bitcoin transactions are stored publicly and permanently on the network most commonly called a “blockchain."  Anyone can see the balance and transaction of any bitcoin address, however, the identity of the user behind an address remains unknown until information is revealed during a purchase or under some other circumstances.   For this reason, bitcoin transaction addresses should only be used once.  As mentioned before, always remember that it is your responsibility to adopt good practices in order to protect your privacy.

Bitcoin is an experimental new currency that is in active development. Each improvement makes bitcoin more appealing, but also reveals new challenges as the adoption of bitcoin grows.  During these growing pains you might encounter increased fees, slower confirmations, or other service issues. Be prepared for problems and consult a technical expert before making any major investments.   Keep in mind that nobody can predict the bitcoin future.

Bitcoin is not an official currency, but that having been said, most jurisdictions still require you to pay income, sales, payroll and capital gains taxes on anything of value including bitcoin. It is your responsibility to ensure that you adhere to tax and other legal or regulatory mandates issued by the U.S. government and local municipalities.

Next month we will be discussing a more in-depth analysis about “blockchain” and how it is used in the insurance industry.

A final commentary, investing or using bitcoin in commerce is a high risk adventure.   As with any investment, your appetite for risk will determine your willingness to jump into this new form of currency.  I have found that the millennials are willing to take the risk and have already been trading in bitcoin and blockchain.  The Baby Boomers are more conservative and are really struggling with the concept. Consequently, many have have no idea how it works. Whether you are a Millennial or a Boomer, just be careful what you wish for and research, research, research.

In just the last few days, the San Antonio Express News and MSN News have been writing warning articles about bitcoin. The Express-News reported that the Texas State Securities Board issued a cease and desist order this week against an overseas company selling investment contracts to mine bitcoin. For more information please review the December 29th issue of the Express-News. The article appeared in the Business Section, under the heading of “Texans warned about firm with ties to bitcoin”. MSN news reported on December 29, 2017, that we need to heed Warren Buffett’s warning: Bitcoin is pure FOMO” - the fear of missing out. Both of these articles are great reading regarding bitcoin.

This article references bitcoin.org multiple times.

Tags:  best practices  business  cryptocurrency  industry  Insurance  InsurTech  Technology 

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Business Risk Management in the Age of Increasing Workplace Violence

Posted By Chris Prewit, Monday, December 4, 2017

Article written by Robert Crosby, Executive Director of Independent Insurance Agents of San Antonio

It seems that every week we hear of another incident of violence in our society. Most recently, the shooting at the First Baptist Church in Sutherland Springs, Texas, reminded us that no place is safe from acts of violence. The frequency of these incidents seems to be increasing and the statistics are frightening and sobering.  

According to the Bureau of Labor Statistics, workplace violence is the second leading cause of death in the workplace. This can be one of the most frightening exposures for a company and just one incident can threaten the very survival of the company. The FBI reports that from 2000 and 2015 the number of annual active shooter incidents increased by 2000 percent. With these types of statistics, business owners must consider the ramifications of an incident in their place of business.  

According to CHUBB Insurance, there are several factors to consider when you are deciding whether or not to add workplace violence expense insurance coverage to your insurance portfolio. Expenses incurred in the aftermath of a workplace violence incident are often staggering and unforeseen. These expenses can include crisis management, independent security, employee counseling, public relations, and salaries for victim employees and for replacement employees, medical care, and rest & rehabilitation for employees.  

Additionally, loss of business income is a very real concern. Many business owners may believe that they have adequate insurance coverage with their General Liability insurance policy. However, Commercial General Liability may only respond if the business is considered legally liable for the incident. Business Interruption coverage will only respond if there is damage to your building. If you have to close your doors for a period of time while your staff recovers emotionally or physically, you may not be able to rely on Business Interruption coverage as a source of income replacement while your doors are shut. Workmen’s Compensation coverage very possibly will not cover a non-job-related injury in the workplace. The expenses to add temporary or new permanent employees is another non-covered expense.

Terrorism Coverage only covers events that generate at least $5 million in Property and Casualty losses and a terrorist attack certified by the U.S. Secretary of the Treasury, the Attorney General and the U.S. Secretary of Homeland Security. The September 11 attacks are the only incidents to date that meet those parameters. Most policies do not provide coverage event crisis response teams, victim counseling or funeral costs for employees, customers, visitors, and others.

Every business should consider assessing the risks that their specific type of business may have but there are certain businesses that have an increased risk of violence. Any company that deals with the public, exchanges money, delivers goods and services, works with unstable or violent persons, operates at night, or plans to reduce their workforce with layoffs or outsourcing of operations have an increased chance of a violent incident.  

There are policies in place through various carriers that provide for coverage in areas of third-party liability, crisis mental health specialists, independent forensic analysis's, funeral expenses, public relations, victim employees’ salaries and replacement employees’ salaries, informant rewards, risk assessment and response training and business interruption just to name a few.

A comprehensive risk assessment of your specific business is critical as coverages can vary widely.  Some policies have limitations depending on employee size, types of weapons and other incident specific particulars.

So where do you start? – take time to review your current coverages with your independent insurance agent and have your agent do a complete assessment of your company’s hiring and training practices, and workplace protection policies.

Recovery from any workplace violence incident is very difficult.  The better prepared a company is the more quickly the recovery process becomes and a return to normal operations is more successfully accomplished.

Tags:  advice  articles  best practices  business  Insurance  World Issues 

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7 Traits of True Insurance Leader

Posted By Chris Prewit, Tuesday, August 29, 2017
Article originally written by Brent Kelly

 

The idea of leadership is often misunderstood, especially in the insurance industry. In my 15 years of being an insurance agent, I rarely thought of myself as a leader. In my mind, I was just an agent. What a terrible mistake. That’s because I didn’t fully understand the true definition and role of leadership. I thought that “true” leadership was awarded, appointed or assigned. I thought that leadership only came with an impressive title or position. The reality is that none of those things are true. If you have ethical influence with those around you, then you are a leader. If you don’t’, no title or position will make up for your lack of influence. As the proverb says, “He who thinks he leads but has no followers is simply out taking a walk.” Leadership comes in various shapes and sizes. Every day you could be leading your family, your team, your prospects, your clients, your community, or your neighbor. Leadership is influence. If leadership is influence, what are the traits that can help you become a better leader regardless of whether you are a CEO, VP, agency principal, sales manager, producer, or service representative? The follow are seven traits of authentic insurance leader:

  1. Character- The first test of any true leader is how they lead themselves. Before you can lead and influence anyone else, you must first be able to lead yourself. Character itself is influence.

  2.  Relationships- In today’s fast and technological world, building authentic relationships is often overlooked. Strong relationships are foundational for any leader. Relationships are influence.

  3.  Knowledge- Knowledge won’t make you a leader, but without it you can’t lead effectively. An influential leader has vision, an understanding of facts, and keeps up to date on industry changes. Knowledge is influence.

  4.  Intuition-Intuitiveness is hard to define, but is vital for any leader. You must know more than just facts and data to lead. You must be able to trust your “feelings” and act when your get is telling you that there is low energy, poor timing, or lost momentum. Intuition is influence.

  5.  Experience- The more you experience, the more you can share. However, you can’t just experience each day; you must also spend time in reflection to turn that experience into insight. Evaluated experience allows you to add more value to those around you. Experience is influence.

  6.  Past Success-Every win you have in life and business builds credibility and influence. People want to know what you have done and what you have achieved. Small wins build into larger wins and give you momentum. Past success is influence.

  7.  Ability-Your followers want to know that you can help them. How can you make their lives better? Demonstrating your ability and willingness to serve others increase your influence. You may be helping an employee, solving a problem for your client, or adding premium growth with a partner company. Ability is influence.

Leadership is often misunderstood, but that does not reduce its impact. If you have influence, you are a leader. Apply and improve upon these seven traits of leadership to your life and business and increase your influence. The world and the insurance industry needs our leadership now more than ever.

Tags:  advice  best practices  careers  leadership 

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Career Path

Posted By Chris Prewit, Wednesday, July 5, 2017

Few of us take the time to actually plan our careers. Too often, a career is something that just seems to happen to us. We take a job, and five years later we discover that we have a “career”. The career planning process is relevant and valuable whether you are in the first year of your first job, or 20 years into your career. A good career path can help you make your career happen instead of just settling for what shows up

Current thinking on career management emphasizes five possible career directions. Understanding these strategies can help you in your career planning process since some certain types of movement are available in some jobs and not others.

  • Upward movement-the traditional conception of career growth. Typically an option for larger companies with multiple layers of management.
  • Downward movement-sometimes a positive career move when you have been promoted or hired into the wrong role and you have a mismatch of values or competencies for a position.
  • Lateral movement-movement from one job type to another.
  • Moving on-sometimes career goals can best be realized by moving on to a position in another organization.
  • Enrich the current job-involves developing yourself and expanding the duties in your present job. This is a traditional path in smaller P & C agencies.

The following is a simple four step process to keep your career path on track.

  1. Setting my values compass is the first step. A good compass will help you find True North when there is no visibility. Likewise, having clearly articulated values that tie to your key life roles and goals allow you to identify what’s truly important and to orchestrate your activities into big accomplishments over the long run, such as completing the education and work experience required to obtain a more challenging and higher paying position.

  2. After you have established your value compass direction, then you set out to map a five year career path. Competencies are the underlying characteristics of a five year career path. Knowing what you are competent of doing will give you direction. Some examples of competencies are easily identifiable such as skills and knowledge. Less obvious examples of competencies include items like behavioral traits/preference, motives, social roles. They can be found in position descriptions, through personality and trait testing like the “Omnia Profile”

  3. Providing provisions for the journey. It’s time to really dig in and be with honest yourself. Which competencies have you mastered and which you need to develop in order to start you journey and to successfully navigate your five year plan.

  4. Staying the course, the following are development methods to keep your career compass pointed true North.

Here are a few recommendations on where to start:

  • Designations, for example CIC, CRM and CPCU.
  • Classroom and insurance company training classes
  • Online training
  • Coaching/Mentoring
  • Cross-Training
  • Challenging Assignments
  • Volunteer Projects
  • Reading

Best wishes and good luck on your career journey!

Tags:  advice  best practices  business  Career planning  careers  industry 

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What will Autonomous Cars mean for Insurance Companies?

Posted By Chris Prewit, Tuesday, August 30, 2016

Article originally written by James Bryant

 

What happens when driverless cars catch on? As much as $160 billion per year in insurance premium could vanish amid improved vehicle safety and reduced vehicle ownership.

While autonomous car technology is years away, driver-assist technology is here today and has already made an impact on the reduction of accidents and premiums.

There would be a shift from individual liability insurance premiums to the auto manufacturer and their suppliers who develop the software that drives these cars.

The car manufacturers would then accept the liability for accidents involving their driverless cars, which would mean the individual is only responsible for comprehensive and collision.  A 2015 report by KPMG estimated that the personal-auto insurance industry would contract 40% within 25 years.

Part of the erosion comes from direct completion from the automotive industry. Instead of competing with each other they should join forces to share data and other valuable information. For example, Toyota formed a joint venture with Aioi Nissay Dowa Insurance. The two companies are working together to develop insurance products based on driver behavior data.

In the driverless car future, there will have to be different actuary models that eliminate the human factor of driving a car.

There is time to figure all of this out according to KPMG. They expect a fully self-driving car to be widely available by 2025, however the Wall Street Journal quoted that we are still operating in an era of millions of recalls for the simplest of technology, such as ignition switches failure, floor mats and air bags. This paints a picture that is not so optimistic for the autonomous car.

Tags:  autonomous cars  autonomous driving  best practices  insurance  insurance articles 

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