Some of the industry’s leading carriers shared their views on the workers’ compensation market at the National Workers’ Compensation & Disability Conference in Las Vegas this week.
The panel consisted of Russell Johnston, Casualty President for the Americas Region, American International Group Inc.; Member, NCCI Board of Directors, Sean D. Martin, VP, The Travelers Cos. Inc., Debbie Michel, EVP Commercial Markets, Liberty Mutual Insurance; President, Helmsman Management Services LLC, and moderator Eric Silverstein, SVP and Risk Management Leader, Lockton Cos.
What are your clients most concerned about?
- Demographics related to the aging workforce. We are getting older and bigger, however, the obesity trend is showing a much larger impact than the aging and will only continue to climb.
- Mitigating medical inflation
- The need to deliver a more integrated approach between benefits and risk management. If you have a healthy employee, you can derive a better outcome.
- The need to provide better data so that we can help our clients see patterns in severity and frequency.
What do you think will happen with TRIA?
- I am cautiously optimistic that we will see an extension of TRIA. If we don’t, we will likely see things happen in Los Angeles, New York and other big cities where EC is an issue.
- The extension is necessary. The industry does not have the capital and companies don’t have the balance sheets to withstand a large catastrophic event.
- I think we’ll see last-minute TRIA legislation, but we should pay attention to some real cost drivers related to it like physical capacity and hospital consolidation. What can we do today to look at severity exposure with all the unknowns associated with it?
22 states have filed for rate increases. What does this mean for the industry?
- Over the last few years, we are beginning to see the industry stabilize. There is better risk selection by carriers and we are seeing some great underwriting.
- Underwriting is evolving. It’s different than how it was. Underwriters are starting to look at each client on an account-by-account basis, staying engaged and considering factors like population, regions, tenure and other factors.
- It’s dangerous to generalize at this point but the industry has improved in many areas. As a whole, the industry is getting better at safety measures, which helps.
In your opinion, how is the California workers’ compensation system doing?
- Frequency is up, especially in Southern California. This is concerning since it has a large workforce which consists of about 30% of the economy.
- They are 60% down in lien filings, which is positive.
- There is still a huge backlog in the medical review process. The administrative challenges are huge and it’s become very hard to close a claim.
- You need to look at California through two lenses – Northern and Southern. It’s highly geopolitical and constantly in transition.
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