Each year, the National Council on Compensation Insurance (NCCI), which gathers data, analyzes industry trends and legislation, and prepares insurance rate and loss cost recommendations, holds an Issues Symposium. The theme of the program is always described in one word that describes the current workers’ compensation environment.
Bill Donnell, president and CEO, identified the 2019 word as “delivering.” “…we should never, never lose the thought that we deliver for injured workers. So this idea of delivering on a 100-year-old promise is a very powerful statement. It distinguishes workers’ compensation from other safety nets.” A short,compelling video, Back to Work: The Faces of Workers Compensation, told the story of how workers comp supported four employees to find the strength and commitment to recover from devastating injuries. Focusing on and motivating the person behind the injury is key to successful outcomes.
State of the Line
Presented by NCCI’s chief actuary, Kathy Antonello, highlights of the State of the Lineinclude:
- Net written premiums for private carriers rose from 39.8 to 43.2 billion. Most of this increase can be attributed to tax law changes and carriers keeping the money onshore.
- While payroll increased, this was offset by lower rates so the overall direct written premium was flat 2017 vs 2018.
- Workers compensation combined ratios decreased 6% from 89% to 83%. 2018 was the lowest workers’ compensation combined ratio on record since the 1930s. This was attributed to the improvement in the underlying loss ratios as a result of underwriting discipline in a low-interest environment.
- California, Illinois, and Florida saw an overall decrease in premiums as declining premiums offset increased payroll.
- Overall reserve position for carriers is $5 billion redundancy. “A redundant workers’ compensation reserve position has not been observed in at least 25 years.”
- In 2018, every NCCI state except Hawaii saw rate decreases. The most significant was Tennessee with a 19% decrease.
- Indemnity claim severity in NCCI states increased 3%.
- Medical lost time severity increased 1%.
- Accident claim frequency decreased by 1%. This is the lowest decrease since 2011. The tight labor market, which means less qualified, younger, and more deconditioned workers in the workforce, could have contributed to the lower decline in frequency. Carriers also saw an increase in slip/fall claims due to the harsher winter in 2018.
Can this good news continue is a common question. While there is no way to predict the future, NCCI CEO Bill Donnell speculated that large swings might be mitigated by two factors. Improved analytics and faster access to data allow stakeholders to see the impact of their decisions and quickly make corrections, and investment in competencies around core processes, such as claims handling, underwriting, and reserving processes add to stability.
On the other hand, the regulatory landscape always has a big impact on the workers’ compensation world, as well as domestic and global affairs. Issues such as marijuana, opioids, opt-out, and post-traumatic stress disorder loom large in states, and the lack of infrastructure spending and a trade war with China could spell bad news for the comp industry looking forward.
Barry Lipton, Practice Leader and Senior Actuary for NCCI discussed a variety of recent NCCI studies .
- Group Health (GH) vs. Workers’ Comp (WC) pricing: Costs for physician services are 77% higher in WC than GH. Price differences were mainly driven by the quantity of services not fees for service. On average, WC prices were about 12% higher per service than GH. However, WC performed 60% more services on similar injuries than GH.
- NCCI Experience Rating Modification: Mods are good predictors of loss outcomes across all industries and Mod types. NCCI sees opportunities to improve predictive power and accuracy and is undertaking a major review of the system.
- Mega claims: The number of mega claims (over $10 million) reported in 2017 and 2018 has dropped back down to long-term average values from an uptick in 2016. However, it remains a top concern and more studies are expected.
Physicians’ view of workers compensation
A panel discussion highlighted the challenges physicians face in working within the workers’ comp system. There is a dearth of occupational medicine physicians in the US (3300) and occupational medicine is not part of education in most medical schools. Many treating physicians don’t understand the medical benefits of work and the effects on patients who are out of work for extended periods of time.
Both primary care and occupational medicine physicians have substantial recordkeeping requirements, discouraging specialization in these areas for other more financially rewarding areas. Moreover, case management time is often not billable. Payers and patients complain that they are not getting enough information. Too much time is spent filling out the forms on the computer, which often means clicking boxes rather than a narrative.
Quality of care, return to work, and medical outcomes do not get the priority they should. Network referral requirements can prohibit the best care options. Telemedicine is gaining traction in the group health setting but much less in workers’ compensation and some feel it is best used for follow-up in comp. Personal interaction can keep the return to work messaging on track.
Opioid use and excess physical therapy are the biggest cost drivers on workers’ compensation claims. Other factors include co-morbid conditions, mental disorders, and legal involvement.
Takeaway: Good occupational medicine physicians are a valuable asset. Take time to understand the challenges they face and the best way to work with them.
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