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Lynch Ryan was founded to solve a problem.

Massachusetts (and for the most part, the rest of the nation) suffered through a severe workers’ compensation crisis from the early 1980s through the mid 1990s. During this period, workers’ compensation premiums, which historically totaled approximately 1% of payroll, were running generally 3% to 4% and, sometimes, more. Insurers seemed incapable of reining in the high costs of claims, which were driven primarily by indemnity wage replacement, rather than medical, costs. Attorney involvement was disproportionately high, and mid-to-high five-figure settlements were common. Soft tissue injuries, sprains and strains, were the leading causes of losses, and, more often than not, after months of absence, employees who suffered such injuries never returned to the same employer, let alone the same job.

In 1984, Thomas Lynch founded Lynch Ryan on the premise that employers were woefully uninformed about the subtle complexities, both human and economic, of workers’ compensation. Lynch believed that educating employers and helping them install worksite-based, loss management systems to return injured employees to work as soon as possible through creative modified duty were the keys to reducing the high costs.

From theory to practice

From 1984 to 1989, Lynch Ryan proved its hypothesis, and during that time, its employer clients from all over the country lowered their workers’ compensation costs by an average of 49.6% within one year of hiring the firm. The company’s typical client had premium costs in excess of $100,000 with more than 100 employees in a single plant operation. But the firm also attracted many larger, brand name, multi-site companies spanning major industries, such as paper, plastics, textiles, electronics, retail sales, transportation, travel, education, health care, and even municipal government.

In 1987, Lynch Ryan entered a joint venture with Tufts Associated Health Plan to create ManagedComp, which organized and managed the Commonwealth’s first self-insurance group. ManagedComp blended Tufts’ medical management expertise with Lynch Ryan’s workers’ compensation know-how and, ultimately, became the nation’s largest managing general underwriter.

By 1989, it became apparent that while American business was in the throes of the workers’ compensation crisis, Lynch Ryan’s clients enjoyed relative prosperity. An oasis in the desert of high cost insurance, Lynch Ryan had achieved a solid reputation for success, and the insurance industry had grudgingly accepted the company’s worksite-based loss management solutions as significant in lowering the high costs of workers’ compensation.

Despite the Company’s success within its own client base, the Massachusetts workers’ compensation market continued to deteriorate significantly. Both insurers and employers were in distress and pain. The Assigned Risk Pool, the insurer of last resort for employers who could not find coverage in the voluntary marketplace, had grown by historic proportions to $800 million, more than 65% of the entire premium in the Commonwealth, and more than 80% of all employers. In response, Lynch Ryan proposed a major innovation to the Massachusetts Workers’ Compensation Rating and Inspection Bureau: the Qualified Loss Management Program.

Over the years of the QLMP, Lynch Ryan serviced more than $54 million in premium, earning employers more than $5 million in credits and millions more in cost reductions. This achievement positioned Lynch Ryan as a formidable force within the national insurance consulting marketplace, as the QLMP, or a variation of it, went on to become replicated in West Virginia, New Hampshire, Missouri and Wisconsin.

Center stage in the national arena

In 1991, the Travelers Insurance Company purchased Lynch Ryan to harness its unique expertise for the benefit of a large clientele of frustrated Fortune 500 customers who were demanding that something be done about their mounting loss costs. By purchasing Lynch Ryan, Travelers addressed this runaway problem and, at the same time, redefined the way it delivered workers’ compensation to the nation’s largest employers. Travelers workers compensation insurance and claims management programs serviced more than half the nation's Fortune 500 employers. Working side by side with Travelers’ sales staff, the new subsidiary reinterpreted how injury management and prevention were introduced to these large multi-site firms.

As Travelers retooled to become one of the nation's largest financial conglomerates, and as the workers compensation crisis temporarily subsided, the relationship between the parent company and the subsidiary was renegotiated to reflect both firms' changing priorities. In 1996, after a successful five-year relationship, Lynch Ryan’s original founders repurchased the company in an amicable separation.

Serving small employers too: COMPlus™

By the time of the buyback, the workers’ compensation crisis in Massachusetts had abated, due to the general, industry-wide adoption of Lynch Ryan’s methods, concepts and systems, as well as to a change in law favorable to employers. Workers’ compensation premium rates were declining rapidly, and the Commonwealth was approaching a period of stability.

In 1996, Lynch Ryan entered into a joint venture with Worcester Insurance Company (Worcester) to create a new Massachusetts workers’ compensation insurance offering, called COMPlus™ to address the needs of small employers. Lynch Ryan redesigned its systems to accommodate the smaller size of Worcester’s traditional client base and trained all of Worcester’s employees who were attached to COMPlus™.

From 1996 to 2001, as rates fell precipitously and insurers offered steep discounts in a very competitive Massachusetts marketplace, the Lynch Ryan/Worcester venture was spectacularly successful. With annual premiums averaging between $11.5 million and $14 million, loss ratios were consistently in the 50% ato 55% range, providing Worcester Insurance with a large, annual underwriting gain.

The next innovation: Behavioral Underwriting©

Lynch Ryan played an integral part in both sales and claims administration of this program. But in a surprise to everyone connected with the project, the most fundamental achievements of the venture were in the area of underwriting.

The underwriting aspect of COMPlus™ evolved into a two-part system. In the first part, Worcester’s underwriters examined each prospect in the traditional method. What kind of business is it? Is the business profitable? Is it solvent? Can it pay the premium? Is the class of business a class with which the company feels comfortable? Important questions, but not exactly cutting edge.

To this mix, Lynch Ryan introduced the concept of Behavioral Underwriting©. The company wanted to know if the business being underwritten would comply with the Lynch Ryan system. Would management accept responsibility and take control of the safety and injury management process? Would it, following Lynch Ryan’s lead, train supervisors and employees in the new system? Would it embrace modified duty and early return to work? Would it make safety "Job 1"?

To find out, Lynch Ryan developed a brief, but instructive, questionnaire, administered by a Lynch Ryan manager to a senior manager of every prospective insured. In the hands of a highly trained Lynch Ryan manager, the Behavioral questionnaire became the most significantly predictive instrument of future performance, accurately anticipating success more than 95% of the time.

Continuing the tradition

Today, Lynch Ryan continues to deliver results for a roster of firms in every facet of the workers compensation system: insurers, third party administrators, managing general agents, brokerage firms, employers, government entities and industry associations.