At the 2018 SAWCA All Committee Conference, a panel of carrier representatives discussed a wide variety of issues that are impacting the workers’ compensation industry. The panel was:
- Tom Hebson – York Risk Services Group
- Mark Walls – Safety National
- Shawn Mackey – Midwest Employers
- Tom Glasson – AIG
Recent Election Impact on Workers’ Compensation
- The first thing that is impacted are regulators and administrative law judges that are appointed by governors. When a new governor is elected, this usually means a turnover of these positions. This can cause disruption in the system and change the way statutes are enforced and interpreted.
- The changes on the legislative side can have a huge impact. In one state there are 39 new legislators coming to the table in 2019. You don’t know how those new people will view workers’ compensation.
- In states where there are new trifectas (one party controls governor and both branches of legislature) you have the potential for new legislation. Illinois is one of those states and the last few years there has been a battle between the Republican governor and Democratic legislature over workers’ compensation for years. There is also concern that new Democratic administrations may look to expand workers’ compensation benefits as employer costs have been trending downward for years so they may feel it is time for the pendulum to swing the other way.
- Keep an eye on where the money comes from in the elections. There are a lot of groups donating money to candidates that have an agenda they want to push.
- There is an aging workforce and this can lead to more co-morbidities on claims. However on the flip side, older workers tend to be safer and have lower accident frequency rates. Studies have shown that while older workers may have higher accident severity, the overall costs of their claims is not higher because of the lower frequency.
- The bigger impact from the workforce right now is the high employment rates. The newer workers tend to lack sufficient training and thus not be as safe. We are starting to see a trend toward accident frequency rates creeping up after years of decline and this is being attributed to the lack of training for the new workers.
- Claims costs are increasing dramatically on the larger catastrophic injuries due to a combination of accident survivability, increased life expectancies, and increased costs of treatment. Large claims used to top off around $5 million. Now the norm for such claims is closer to $10 million. Individual claims have been seen as high as $40 million and a $20 million claim is becoming more common. NCCI has been doing studies around the increase in these Mega Claims.
- Conversations around the gig economy are shining a new light on an old problem which is the definition of an independent contractor.
- The definition of independent contractors is a huge challenge for the industry. One fo the biggest challenges for carriers is that if an independent contractor has a serious injury claim, the courts go out of their way to find workers’ compensation coverage. Even if you verify that the person meets all the qualifications of an independent contractor that doesn’t stop the courts from ruling otherwise.
- States have different definitions for independent contractor for workers’ compensation, wage and hour laws, and IRS tax laws. These conflicting definitions make this a very challenging area for employers.
- This is an issue that state and federal legislatures need to be taking a hard look at. The confusion right now is bad for workers, employers, and carriers.
- Many carriers are investing heavily in predictive analytics with the hope of being able to identify claims with potential to have poor outcomes.
- The modeling is a tool in the tool box. What makes the impact is changing the behavior on that claim. If the model flags something and you don’t do something different then you will not change the outcome. At the end of the day, good old fashioned claims handling is what impacts claims costs.
- Modeling is a tool, but just because you have tools doesn’t mean you use them correctly. Being overly reliant on models instead of well-trained adjusters can make things worse instead of better. They are not the solution to everything.
- One of the biggest challenges in our industry is attracting and retaining talent, as well as capturing the knowledge of retiring employees so that can be passed to the next generation.
- Adjusters don’t feel the sense of ownership on a claim that they used to have. There are so many people touching a claims file doing so many specialized things. This has complicated the claims handling process.
- The focus of training tends to be on compliance issues such as filing forms, calculating rates, etc. We need more of a focus on soft skills such as communication, customer service, and negotiation skills. It is these soft skills that make the difference in the experience of injured workers when they have a claim.
- Big natural disasters can change your book of business in an area. Businesses that existed are wiped out and there is a huge influx of new construction companies. These companies are more worried about getting the work done quickly than they are about safety. The risk profiles of these pop-up companies are not the same as normal established companies in the same business.
- When a natural disaster happens, it is important that regulators are flexible around compliance issues. With significant disruption, it is very difficult to ensure claims are reported timely and checks issued timely. When the hurricane hit Texas last year they did a great job issuing waivers on compliance issues.
- Mutual aid policies with first responders means you can have exposures to loss even if your insured’s were not directly impacted.
What Is the One Thing in Workers’ Compensation You Would Like to See Changed:
- It would save a lot of time and money if there were national standards for both claims forms and data reporting to the states. Having 50 different first reports of injury does not benefit injured workers or make the system more efficient. It just adds costs and complexity.
- Consistency around medical treatment guidelines and the ability to direct injured workers’ to the appropriate provider. Better care leads to better claim outcomes.
- Over the years we have put in processes and regulations that no longer make sense. Regulators need to take a hard look at their regulations to make sure they are making a positive impact on injured workers. One example of this is the fact that in some states a paper check is required for indemnity benefits. Carriers can provide direct deposit or a debit card to injured workers so they receive their benefits more timely, but the regulations don’t always allow this.