After my last two blogs, Adjusters Are People, Too and AI Should Give Me Time, Not More Claims, I felt the need to address this from the carrier’s and third-party administrator’s perspective, too. My experience running the workers’ compensation program for The University of Texas System (UT System), who was defined by law as the insurance carrier for the institutions within the system, taught me the carrier perspective. I understand the hurdles faced but have also reaped the benefits inserted advocacy into a program can deliver as described in the Transforming Workers’ Compensation through Claim Advocacy: A Case Study of The University of Texas System white paper I wrote.
Let’s be honest. Insurance carriers and third-party administrators are businesses. They have shareholders, owners, employees, operating expenses, performance expectations and, yes, a responsibility to make money. They are expected to do more with less. They are expected to manage claims efficiently, control costs, maintain appropriate reserves, meet regulatory requirements and deliver results. I respect that UT System’s program was slightly different. Our goal wasn’t to make a profit, but we were also trying to lower costs to reduce rates charged to our institutions to run the program. That commonality existed with us, too.
To me, profit and compassion aren’t mutually exclusive. I would argue they are intrinsically connected.
What If We Stop Looking at Advocacy as an Expense?
I see the advocacy traints differently. I see them as risk management tools that mitigate the loss of time, unnecessary expenses, and protect reputational risks.
Think about what happens when an injured worker doesn’t understand the process. They become frustrated, call repeatedly, and may begin to distrust the employer, the carrier or the adjuster.
Communication breaks down, a dispute develops, an attorney gets involved, and the claims process becomes more complicated. The injured worker may lose confidence in the system, while the carrier potentially spends more money and more time managing a claim that might have been resolved differently with better communication at the onset.
The Grand Bargain
Let’s reflect on our history. Workers’ compensation was built on a fundamental tradeoff, referred to as the Grand Bargain. Injured workers gave up the right to pursue most workplace injuries through traditional litigation in exchange for a system designed to provide timely, predictable benefits without having to prove fault. Employers, in turn, received greater certainty and protection from potentially costly lawsuits.
Over time, layers of complexity, delays, and distrust have pulled us further away from that original purpose. When communication breaks down and disputes become the norm, the Grand Bargain starts to feel less like a system built around recovery and more like a system built around defending positions.
Maybe it’s time to clear some of that fog. My aspiration is to have advocacy return us to the original intent of the Grand Bargain.
The Cheapest Claim Is Not Always the One You Deny
Saying “no” is not always the best financial decision an adjuster can make. At the onset, a denied claim, through smoke and mirrors, looks cost effective. Unfortunately, that nasty tail can slap you across the face with reality when the denial is overturned after countless hours defending your case. The result is increased attorney fees and lump sum payments due with interest and countless hours wasted. Hours that should have been given to the injured employees quietly suffering in an endless maze of confusion.
Imagine having the time to understand why the claim is becoming difficult. Time to explain why an injured employee’s treatment was denied or what happens next. Time to recognize the injured employee is worried about losing their job and experiencing financial problems that are ultimately impacting successful recovery.
I’ve come to understand the workers’ compensation law roadmaps the minimum requirements to be delivered. The law and rules don’t prevent a carrier or any system participant from offering resources beyond those minimums.
Look Beyond the Workers’ Compensation Check
One of the most effective lessons from my experience with the UT System was learning to look at the resources that already existed outside the workers’ compensation program. For the benefit of the employees we supported and the institutions we served as employers, our team learned to capitalize on the employee assistance (EAPs) and return-to-work programs, modified-duty opportunities, outplacement services, and medical resources available.
Let me give you a real-life example. At UT System, we didn’t just talk about return-to-work. We developed a way to quantify the financial value of the modified-duty accommodations. The metrics allowed us to report to executives that accommodating light-duty restrictions avoided $2 million in wage-replacement benefits that would have otherwise been due. Those opportunities also maintained the relationship with the injured employee’s work family as they recovered.
Many employers and communities have similar resources that don’t necessarily cost the workers’ compensation program more money but help bring solutions and remove barriers to recovery that build profit by eliminating unnecessary expenses.
This philosophy is not simply compassion, it’s cost containment.
Communication Has a Price Tag, Too
We often measure the cost of adding something to a claim. Maybe we should also measure the cost of not doing something early enough.
A phone call isn’t an expense. A phone call can also be an investment. A conversation before a denial isn’t an unnecessary courtesy. It can be an opportunity to explain, listen and prevent a misunderstanding from becoming a dispute.
The numbers from the UT System experience are compelling. After adopting a formal claim advocacy philosophy in 2015, claim counts and costs continued to decline even as the covered workforce grew significantly.
When I retired in 2024, our fully retained workers’ compensation program covered over 145K employees. The program’s overall average rate ultimately dropped from $0.80 per $100 of payroll in 1993 to $0.085 in 2024, an 89% reduction.
I’m not suggesting that advocacy alone produced every one of those results. The program evolved over decades, and there were multiple strategies involved. But the data certainly challenges the assumption that human-centered claims management and financial performance are opposing goals.
Here’s my final thought for you. Let’s not just ask “How much is this going to cost?” Let’s also consider, “How much is it costing us when we don’t act?”
What does one avoidable dispute cost? What’s the cost of an unnecessary attorney, one delayed return to work, one claim that continues to linger because no one had the time to pick up the phone and understand what was really happening? We have become very good at measuring the cost of benefits, but let’s also find a way to measure the cost of barriers, poor communication and missed opportunities to help someone recover.
Sometimes the most expensive claim isn’t the one where we paid too much. It’s the one where we did too little, too late.
