Column: Workers' Comp

Disquiet on the Workers’ Comp Front

By: | July 6, 2017 • 3 min read
Roberto Ceniceros is senior editor at Risk & Insurance® and chair of the National Workers' Compensation and Disability Conference® & Expo. He can be reached at rceniceros@lrp.com. Read more of his columns and features.

With the Affordable Care Act’s fate tied to Washington politics, it must be challenging for workers’ compensation insurers and anyone else needing a longer-term view of how claim expenses will trend.

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Perhaps one of the biggest challenges is the unknown of how any changes to the ACA will impact the number of Americans able to purchase health coverage.

In an April commentary, Phil Kalin, CEO of Colorado’s Pinnacol Assurance, warned that business leaders in his state “regardless of their opinions on the ACA — should be aware of how its dismantling could slow a favorable trend for their work comp costs.”

His premise: a lack of health insurance leads to more claim shifting onto workers’ comp.

Before joining Pinnacol, a state-chartered workers’ comp insurer, Kalin served as CEO of the Denver-based Center for Improving Value in Health Care, an organization supporting moving away from fee-for-service health care to quality care. He has also served in hospital system senior-management roles. It makes sense he would opine on how shifts in health insurance coverage will impact worker’s comp costs.

The uncertainties of Washington and health care insurance’s future make it even more imperative to bet on the certainty of strategies that embody proven risk management concepts.

Workers’ comp claims and costs have slowed in recent years as more Americans obtained health insurance, Kalin wrote. He supports his premise by citing statistics from Colorado and other states showing “there is a clear association” between more Americans covered by health insurance and a decline in workers’ comp claims.

From 2010 to 2016 medical only claims insured by Pinnacol dropped 28 percent. Although other factors played a role, Kalin believes the ACA’s impact was significant.

Similarly, a Fitch Ratings report released in May stated that workers’ comp has been a bright spot among commercial lines insurance with the line exhibiting combined ratios of 95 percent in 2015 and 2016. Employment growth, stable claims trends and macroeconomic improvements contributed to workers’ compensation’s profitability.

“Implementation of the Affordable Care Act and a corresponding shift of individual medical care delivery away from workers’ compensation to other markets may also be a factor that bears further study,” Fitch’s report stated.

By contrast, information released nearly two years ago by the venerable Workers’ Compensation Research Institute forecasted that “case shifting” caused by the ACA could migrate hundreds of millions of dollars in costs from group health onto workers’ compensation.

The premise: The ACA’s capitation of medical provider reimbursement would encourage doctors to find more injuries to be work related so they could tap into more lucrative worker’s comp medical care payments.

That prognosis, right or wrong, was made in 2015 when the ACA enjoyed President Barrack Obama’s protection, making its future seem more certain.

Now, as I write this column, the ACA’s future is in the hands of a Republican president and Republican-dominated Congress that are searching for a way to deliver on campaign promises of eliminating the ACA and finding a replacement.

What that replacement would look like, if indeed it comes about, remains a big mystery, especially with the Republicans crafting legislation out of public view.

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That makes it impossible to venture a guess on how any new legislation might impact workers’ comp claims and expenses. Add in the normal uncertainties of making such forecasts, even when information is readily available, and you get a very difficult environment for predicting the impact on a line of insurance with a long tail exposed to medical inflation.

“We are sitting here with bated breath,” a Pinnacol spokeswoman told me.

The rest of us will have to join her.

Meanwhile, there are the risk management fundamentals we know consistently work no matter the political landscape. They are the investments and actions good risk managers and insurers can engage in to improve operations overall.

They are the things that always reduce costs, like driving accident rates even lower, immediately getting injured workers quality medical care, and fortifying return-to-work efforts.

The uncertainties of Washington and health care insurance’s future make it even more imperative to bet on the certainty of strategies that embody proven risk management concepts.

More from Risk & Insurance

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Risk Management

The Profession

This senior risk manager values his role in helping Varian Medical Systems support research and technologies in the fight against cancer.
By: | September 12, 2017 • 5 min read

R&I: What was your first job?

When I was 15 years old I had a summer job working for the city of Plentywood, mowing grass in the parks and ballfields, emptying garbage cans, hauling waste to the dump, painting crosswalk lines.  A great job for a teenager but I thought getting a college degree and working in an air-conditioned office would be a good plan long term.

R&I: How did you come to work in risk management?

I was enrolled in the University of Montana as a general business student, and I wanted to declare a more specialized major during my sophomore year. I was working for my dad at his insurance agency over the summer, and taking new agent training coursework on property/casualty risks in my spare time, so I had an appreciation for insurance. My dad suggested I research risk management for a career, and I transferred sight unseen to the University of Georgia to enroll in their risk management program. I did an internship as a senior with the risk management department at Sulzer Medica, and they offered me a full time job.

R&I: What could the risk management community be doing a better job of?

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We need to do a better job of saying yes. We tend to want to say no to many risks, but there are upside benefits to some risks. If we initiate a collaborative exercise with the risk owners — people who may have unique knowledge about that particular risk — and include a cross section of people from other corporate functions, you can do an effective job of taking the risk apart to analyze it, figure out a way to manage that exposure, and then reap the upside benefits while reducing the downside exposure. That can be done with new products and new service offerings, when there isn’t coverage available for a risk. It’s asking, is there anything we can do to reduce the risk without transferring it?

R&I: What emerging commercial risk most concerns you?

Cyber liability. There’s so much at stake and the bad guys are getting more resourceful every day. At Varian, our first approach is to try to make our systems and products more resilient, so we’re trying to direct resources to preventing it from happening in the first place. It’s a huge reputation risk if one of our products or systems were compromised, so we want to avoid that at all costs.

We need to do a better job of saying yes. We tend to want to say no to many risks, but there are upside benefits to some risks.

R&I: What insurance carrier do you have the highest opinion of?

I’ve worked with a number of great ones over the years. We’ve enjoyed a great property insurance relationship with Zurich. Their loss control services are very valuable to us. On the umbrella liability side, it’s been great partnering with companies like Swiss Re and Berkley Life Sciences because they’ve put in the time and effort to understand our unique risk exposures.

R&I: How much business do you do direct versus going through a broker?

One hundred percent through a broker. I view our broker as an extension of our risk management team. We benefit from each team member’s respective area of expertise and experience.

R&I: Is the contingent commission controversy overblown?

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I think so. The brokers were kind of villainized by Spitzer. I think it’s fair for brokers and insurers to make a reasonable profit, and if a portion of their profit came from contingent commissions, I’m fine with that. But I do appreciate the transparency and disclosure that came out as a result of the fiasco.

R&I: Are you optimistic about the US economy or pessimistic and why?

David Collins, Senior Manager, Risk Management, Varian Medical Systems Inc.

While we might be doing fine here in the U.S. from an economic perspective, the Middle East is a mess, and we’re living with nuclear threat from North Korea. But hope springs eternal, so I’m cautiously optimistic. I’m hoping saner minds prevail and our leaders throughout the world work together to make things better.

R&I: Who is your mentor and why?

My Dad got me started down the insurance and risk path. I’ve also been fortunate to work for or with a number of University of Georgia alumni who’ve been mentors for me. I’ve worked side by side with Karen Epermanis, Michael Rousseau, and Elisha Finney. And I’ve worked with Daniel Dean in his capacity as a broker.

R&I: What have you accomplished that you are proudest of?

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Raising my kids. I have a 15-year-old and 12-year-old, and they’re making mom and dad proud of the people they’re turning into.

On a professional level, a recent one would be the creation and implementation of our global travel risk program, which was a combined effort between security, travel and risk functions.

We have a huge team of service personnel around the world, traveling to customer sites to do maintenance and repair. We needed a way to track, monitor and communicate with them. We may need to make security arrangements or vet their lodging in some circumstances.

R&I: What do your friends and family think you do?

My 12-year-old son thought my job responsibilities could be summed up as a “professional worrier.” And that’s not too far off.

R&I: What about this work do you find the most fulfilling or rewarding?

Varian’s mission is to focus energy on saving lives. Proper administration of the risk function puts the company in a better position to financially support research that improves products and capabilities, helps to educate health care providers and support cancer care in general. It means more lives saved from a terrible disease. I’m proud to contribute toward that.

When you meet someone whose cancer has been successfully treated with one of our products, it’s a powerful reward.




Katie Siegel is an associate editor at Risk & Insurance®. She can be reached at ksiegel@lrp.com.