Who's the "client" and who's the customer?
Blog - Who's the "client" and who's the customer?
Workers' compensation is a strange kind of insurance. The employer pays for it, but only gets the indirect benefits of compliance with the law and immunity from many common law actions. It's the injured person who is supposed to get the services and benefits.
So we have to ask "Who does the insurer work for: the employer who pays the premium, or the person who has the injury and is covered by the policy? " To whom does the insurer owe its allegiance?
The people in charge of workers' compensation schemes sometimes seem to get confused about this issue.
The statutory agency's Board of Directors is concerned about the premium structure, largely because many of the directors come from a business or political background where concerns about premium cost are discussed very publicly.
Strategic direction, KPIs and measures of system performance for the statutory regulator are sometimes slanted, perhaps unconsciously, to prioritise the issue of premium affordability over issues that are more important to the worker who is supposed to get the benefit from the policy.
It's a rare regulator that will push back against this sort of direction from his or her Board.
Some states use private insurers who carry the risk (Western Australia, ACT, NSW).
When the statutory authority is designated as the insurer in the legislative scheme and it hires a claims agent to manage the claims (Victoria, NSW, South Australia), things really get complicated. The regulator writes a contract that contains incentives to get the claims manager to do things the way it wants them done. The insurer, as a good commercial entity, concentrates on the fulfilment of the conditions for receiving the incentives.
The workers' needs are now filtered through both the concern of the regulator to fulfil the KPIs it's been given by its Board, and also the concern of the claims agent for its own economic well-being.
We've gotten quite far away from the idea that a consumer buys insurance and then has the expectation that their insurer will treat them fairly.
The same confusion also effects rehabilitation. The rehabilitation professional labours under restrictions and KPIs that often have little or nothing to do with the recovery of the injured worker. The side that pays calls the shots.
Witness the restrictions on practice contained in the approximately 180 pages of regulations dealing with the provision of rehabilitation services in Victoria, or the almost total focus on Work Fitness Assessments in South Australia.
So there's a problem. Are there any examples of someone doing it better?
Well-run self-insurers have a different relationship with their injured workers. They have no competition between interests. Their workers' injuries directly affect the bottom line of the company and the interest in both the employer and worker in quick and complete recovery.
Self-insurers often have much better rates of durable return to work, lower costs, and less litigation. They also have quite different relationships and expectations with rehabilitation professionals. Perhaps we might take the opportunity to look at what they are doing well.
Some individual service providers have also found a way to balance the needs of the scheme with the needs of the people they serve. They stand out, regardless of the where they work or the service they provide. You probably can think of a few.
If it's true to say that the needs of the injured person and the premium payer are not always balanced as well as we'd like, then serious discussion of this topic is overdue. Stakeholders, politicians and Board members must consider, and keep front of mind, all of the primary objectives of the system if they want to get it right.