IN DEPTH: WORKERS’ COMPENSATION
TCOR as Problem Solver
An accurate picture
of total cost of risk
management layers to
work together to seek
By Roberto Ceniceros
Determining total cost of risk allows management to make data-based decisions.
Vague return-to-work instructions from doctors can frustrate an employer’s need to clearly define the roles returning employees can play following a disabling workplace injury. For example, a doctor’s instructions may say the worker cannot lift more than 15 pounds. That saddles employer return-to-work efforts with the onerous
responsibility of matching the doctor’s scant instructions with actual allowable
work site tasks, explained Judie Tsanopoulos, system director workers’
compensation and risk control at Providence St. Joseph Health.
“A big struggle for an employer is the sometimes vague and ambiguous
restrictions the physician community provides when it comes to returning people
back to work,” Tsanopoulos said.
“They are not specific and [their restrictions] are not unique to that individual’s
Tsanopoulos credits a total cost of risk analysis for alleviating that problem. It
helped her win upper management’s support for a job function matching, analysis
and testing program that substantially reduced lost work days.
Several other strategic advantages flow from calculating a workers’ comp
program’s total cost of risk, or TCOR.
KNOW YOUR TCOR
A TCOR analysis, for instance, can help risk managers confirm that
implementing a seemingly counterintuitive strategy ultimately proved the
appropriate measure, said Barry D. Bloom, managing principal at The bdb Group.
As an example, a risk management department may consistently fail to resolve
contested claims when claimants’ attorneys decline low settlement offers. But
then the risk management department shifts strategies, more frequently offering
greater settlement amounts to close claims full and final.
In that scenario, the risk management department initially would incur
greater cash-flow expenses but ultimately reduce loss development factors and
administration costs by closing more claims earlier.
The risk management department would not realize the ultimate cost
reduction resulting from its shift in strategy until it conducted a TCOR
evaluation, Bloom said.
“You are using TCOR to justify a practice, philosophy or policy, and the TCOR
provides the proof that the counterintuitive solution is the right one,” he elaborated.
While there are various applications for a TCOR analysis, savvy risk managers
cite winning upper management’s engagement as one of the most significant
benefits. TCOR is a powerful tool for winning support for an array of programs
known to mitigate workers’ comp exposures, they note.
Engagement is a primary benefit resulting from tracking the TCOR for
Albertsons Companies, said Matt Peters, finance director of risk management for
the national retailer with more than 2,300 stores.
“Our total cost of risk was the most advantageous item we could share to truly
engage senior leadership,” said Peters.
Once a TCOR analysis detailed the
organization’s workers’ comp spending,
management asked how those costs
could be reduced, Peters said. The
inquiry into reducing TCOR opened
the door to winning backing for a plan
to drive safety awareness throughout
“That instantly brought engagement
once they truly understood our total
exposure and what it is costing us as an
organization,” Peters said.
• If upper management grasps
TCOR, it could move to fund
• Communicating TCOR gives
business units guidance on
• Determining TCOR can better
define a company’s risk profile.
“You are using TCOR to
justify a practice, philosophy
or policy, and the TCOR
provides the proof that the
counterintuitive solution is the
— Barry Bloom, managing principal,
The bdb Group