The Client and Its Challenge
After seeing workers’ compensation costs rise to nearly $17 million, this major U.S. conglomerate wanted to understand how to reduce costs and more efficiently administer its workers’ compensation programs. As part of this effort, the client needed to understand how its workers’ compensation costs and performance compared to its industry peers.

The Risk Consulting Solution
Marsh was retained to evaluate and benchmark the workers’ compensation performance of the company’s two largest business units and identify cost savings opportunities. As a first step, consultants worked closely with the client to gather, organize, and categorize loss data by employee occupation.

To evaluate performance against similar industry peers, consultants compared the client’s results to Marsh’s Dimensions™ database, a data warehouse of workers’ compensation claims information from insurance companies, state funds, and third-party administrators. Consultants created “virtual peers” by comparing client loss data by state, employee occupation, time period, and claim volume. The client’s results were measured against these "peer" industries.

With this information, Marsh identified areas that offered the greatest cost-saving opportunities, pinpointed by location and business unit as well as by type of employee function. In areas where severity outcomes were higher than industry peers', consultants analyzed various claims-handling characteristics that lead to substandard performance, including higher percentages of indemnity claims, longer claim durations, catastrophic claims, and a larger percentage of open claims.

Results
As a result of Marsh’s assessment and subsequent identification of the company’s high-return areas for improvement, Marsh was asked to analyze the client’s remaining three business units to ensure savings opportunities were not being overlooked. After both phases of the Dimensions project, Marsh identified $4 million in projected workers’ compensation savings. The assessment created a roadmap from which the company could efficiently apply its resources to attack its growing workers’ compensation costs. The client was also able to formally recognize business units that deserved accolades for best-in-class performance and set benchmarks for future performance objectives.