The Stephens Insurance team applies our tailored Cost-Based Efficiencies (CBE) strategies to help clients lower their workers’ compensation spend. We leverage data analytics to identify perverse incentives and hidden costs that are built into today’s complex claims system.
After analyzing over $150 million in workers’ compensation claims, we have found that the Stephens CBE analysis can expose extra costs to clients, what we refer to as “financial leakage,” of anywhere from 20% to 30%. These savings accrue to the benefit of shareholders and for publicly traded companies. Specifically, savings from our CBE strategies may translate directly into improved share price performance due to the recurring nature of earnings improvement.
A publicly-traded transportation company — was searching for ways to reduce their claims costs. The client utilized a mix of self-insurance and large deductible policies to manage their risk. They also contracted with a third-party administrator (“TPA”) to manage claims in addition to having in-house staff to monitor claims.
Wanting to do more, the client partnered with Stephens via a consulting engagement to deploy our CBE strategies. Our team worked directly with the client’s internal team to address and eliminate the identified hidden costs within their annual workers’ compensation spend. After conducting our analysis, the Stephens team presented a comprehensive report summarizing the amount of financial leakage in their program. This report revealed an opportunity for the client to recapture over 25% of the dollars spent on an annual basis.
As a result of this analysis, the client chose to replace their TPA with a more transparent partner. We assisted the client in running the RFP in search of the new TPA and utilized our platform to ensure the responding TPAs adhered to our standards for handling claims. As a result, the client now has a claims management process that delivers complete transparency of all costs, resulting in significant savings.
We also have clients that have continued their partnership with their incumbent TPA or self-administer their claims after our analysis. In these cases we work with their team to restructure their current arrangement to achieve financial savings.
Our approach resulted in annual savings of 25%+ , lowered the amount of collateral needed to secure workers’ compensation policies, and is helping deliver shareholder value. These savings are poised to occur each year going forward, resulting in an ongoing benefit to the client and its shareholders.