Workers’ Comp: The Fine Line Between Complicated and Complex

by | Oct 15, 2021 | FB Comp Advisors, FB Risk Advisor, Risk Advisor Insights, Risk Management

Successful businesses understand the need to stay flexible in a rapidly changing world. They are built to leverage the strengths of their teams and to think through complicated problems. Yet, in my experience, many of these same businesses don’t apply this same approach to risk management in regards to their Workers Compensation program. If you can, fight the urge to turn away because I said Workers’ Comp. Instead focus on this: Have you ever considered how really successful businesses find a competitive edge and increased profitable through this necessary evil?

The answer lies in the distinction between a complicated process vs a complex process, and their respective solutions. Humans are good at making difficult connections and finding solutions for many complicated problems. As a business leader, this happens day in and day out at your organization – implementing a new CRM or inventory management system; reviewing data to find opportunities to growth. The disconnect happens when complex challenges are approached with the same mindset as solving a complicated challenge.


 When we face complicated challenges, we face them with linear thinking and a step by step approach. Many times the solutions have a bit of predictability. Leveraging our cumulative strengths allows us to get the right expertise to tackle the problem.

Complex challenges are not so linear. Instead, they are the challenges that tend to change, evolve, and remain a bit evasive. Instead of step by step solutions, complex challenges require you to try new things, pivot, and become comfortable with the fact that there is not a challenge that you ever truly solve.

For example – you rolled out new CRM software for your organization. It was complicated and required commitment from all levels of management, IT, and more. Now, consider the difference between that challenge and no leveraging this new software to deliver an amazing consumer or B2B experience each and every time. That is a complex challenge – as the needs of your clients will evolve and change, as will the culture and needs of your organization.


If you look up the most often searched phrases for Workers Comp you’ll notice they fall into one category:

  1. How do I get paid when I’m injured?
  2. How do they come up with their rates?

As an insurance advisor, I see this play out in many ways. Either an injured employee putting up their guard because they feel like they are going to be taken advantage of. Or, an employer afraid to be taken advantage of by either an injured employee or the insurance carrier.

There are reasons these feelings exist. The insurance industry hasn’t done a very great job of explaining how the process works – because it is complex. When faced with a complex problem and without having all the information, we often experience decision-making paralysis and feel like there is no right way forward. So, we simplify the complexity to make sense of it. This is where the “it is what it is” approach to Workers Comp comes in.

Now, if you happen to understand how the Workers Comp system works you understand that premiums are impacted by actual losses from three prior policy periods, not including the most recent policy period; expected losses based on payroll and expected loss rates for your industry; the amount of each loss; the frequency of losses; ballast and weighting values……Complex, right?

On top of that, there are indirect impacts through the healthcare system, the classifications of your employees, employee duties, the duration of a claim. More complex, right?

This complexity leaves many business owners feeling like there is no control over the process. This is a victim-buying mindset and very often has negative impacts on an organizations bottom line, productivity, and profitability.

And, since the “rates are what they are” there is nothing a business can do, right? Not so fast….this is a  complex challenge, so let’s look at it that way.


Complex processes don’t require a step by step approach to see results. So, step 1 – understand and realize that the Workers Compensation Experience Modification Rating system is complex and it will take a more robust approach for you to maximize the process to your benefit.

Really successful businesses understand this and they understand that complex challenges will require not only reliable and iterative formulas, but getting all the right players on board to drive results quicker. These allows them to keep pace with the changes and challenges.

For Workers Compensation, this means a team of people equipped to handle the analysis of your losses, trends in the losses, and the impact of both large and small losses. It also requires a team to manage any workers comp claims to reduce the overall duration and cost of the claim. It requires people who understand the processes within the healthcare system that determine the pricing of the claim. It requires regular projection of your workers comp experience to set benchmarks.

When teams like this are in place, businesses have support and collaboration on identifying areas of improvement, understanding cost drivers, and isolating real problem areas. What financial loss would you avoid if this team were able to reduce your losses by 25%? 50%?

Further, these businesses understand that this same complex challenge mindset allows them to leverage this data and process to increase profitability across the organization. This process uncovers productivity issues, training opportunities, and employee engagement. This process also allows for proper planning to return employees to work sooner and more efficiently; allows businesses to identify the costs not often calculated to replace an injured employee or manage a claim. These are all ways successful businesses use the process to provide insight and help them become more profitable and productive.


An organization cannot do this alone. It is not a one and done process. No complex challenges can be met with one-off solutions. So demand more from your insurance program. My job as a Risk Advisor is to help businesses continue to operate successfully and to protect them from anything that might put their business at risk. Placing a policy is just one part of that. Helping with audits, coverage questions – all parts of my job.

I’m here to tell you that you can demand more from insurance. If the role of an agent is to support you and keep you, your employees, and your business safe, successful and profitable – we all need to understand that there are complex solutions that need to be addressed.

This requires persistence. Persistence in not letting the process dictate to you that it “is what it is” and that shopping will solve the solution. Those are simple answers and don’t touch on the depth that can benefit your organization.



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