Column: Workers' Comp

Optimistic Voices

By: | March 3, 2017 • 2 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 [email protected] Read more of his columns and features.

Workers’ comp industry optimists expect that President Trump’s economic policies will help propel additional insurer premium volume growth through 2017 and even beyond.

Recent growth in employment and wages are expected to generate billions in new workers’ comp premiums written. Factors like lower business taxes, reduced regulatory burdens and shifts in trade policy espoused by the president could fuel further growth.

“Certainly the proposals of the current president suggest it is quite possible we will have an increase in employment in 2017,” including policies that motivate companies to hire domestically rather than overseas, all of which would add to workers’ comp premiums, said Steven N. Weisbart, senior VP and chief economist at the Insurance Information Institute.

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That would also presumably spread revenue to other industry service providers. More jobs inevitably mean more injured workers to service, especially the newly hired.

Recent growth in employment and wages are expected to generate billions in new workers’ comp premiums written.

Weisbart calls his viewpoint “mildly optimistic.” He isn’t alone. His optimism is shared by others who pay close attention to how economic trends impact the workers’ comp industry.

Shifts in business and economic policies, including potential trade agreement changes, are expected to contribute to a strengthening economy over the next couple of years, said John T. Leonard, president and CEO at MEMIC Group, a Portland, Maine-based workers’ comp insurer.

“There will be an increase in payroll associated with a growing economy, particularly [in construction] and payroll is the cornerstone of the development of premium,” he said.

Yet, doubters suggest President Trump’s actions could backfire.

I write my columns a few weeks before publication and as I craft this particular one, headlines suggest Trump-inspired trade wars could slice gross domestic product and harm trade-dependent U.S. employment.

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Even the optimists know headwinds are always a threat.

We are in the midst of one of the longest economic expansions since World War II, increasing the historical likelihood of a coming recession, Weisbart said. But a recession could get pushed farther out, should Congress go along with the president’s proposals, he said.

There is no shortage of oft-quoted comments about the value of economic predictions. Some point out that even with hindsight, observers never agreed on the Great Recession’s causes, let alone its ferocity.

Perhaps, Yogi Berra said it best with his simple quote, “It’s hard making predictions, especially when they are about the future.”

I don’t agree with a lot of President Trump’s policies. But on this topic I hope Weisbart and the optimists have it right. Not many would disagree that economic expansion is always more fun than contraction. &

More from Risk & Insurance

More from Risk & Insurance

2017 RIMS

Cyber Threat Will Get More Difficult

Companies should focus on response, resiliency and recovery when it comes to cyber risks.
By: | April 19, 2017 • 2 min read
Topics: Cyber Risks | RIMS

“The sky is not falling” when it comes to cyber security, but the threat is a growing challenge for companies.

“I am not a cyber apocalyptic kind of guy,” said Gen. Michael Hayden, former head of the Central Intelligence Agency and National Security Agency, who currently is a principal at the Chertoff Group, a security consultancy.

Gen. Michael Hayden, former head of the CIA and NSA, and principal, The Chertoff Group

“There are lots of things to worry about in the cyber domain and you don’t have to be apocalyptic to be concerned,” said Hayden prior to his presentation at a Global Risk Forum sponsored by Lockton on Sunday afternoon on the geopolitical threats facing the United States.

“We have only begun to consider the threat as it currently exists in the cyber domain.”

Hayden said cyber risk is equal to the threat times your vulnerability to the threat, times the consequences of a successful attack.

At present, companies are focusing on the vulnerability aspect, and responding by building “high walls and deep moats” to keep attackers out, he said. If you do that successfully, it will prevent 80 percent of the attackers.

“It’s all about making yourself a tougher target than the next like target,” he said.

But that still leaves 20 percent vulnerability, so companies need to focus on the consequences: It’s about response, resiliency and recovery, he said.

The range of attackers is vast, including nations that have used cyber attacks to disrupt Sony (the North Koreans angry about a movie), the Sands Casino (Iranians angry about the owner’s comments about their country), and U.S. banks (Iranians seeking to disrupt iconic U.S. institutions after the Stuxnet attack on their nuclear program), he said.

“You don’t have to offend anybody to be a target,” he said. “It may be enough to be iconic.”

The world order that has existed for the past 75 years “is melting away” and the world is less stable.

And no matter how much private companies do, it may not be enough.

“The big questions in cyber now are law and policy,” Hayden said. “We have not yet decided as a people what we want or will allow our government to do to keep us safe in the cyber domain.”

The U.S. government defends the country’s land, sea and air, but when it comes to cyber, defenses have been mostly left to private enterprises, he said.

“I don’t know that we have quite decided the balance between the government’s role and the private sector’s role,” he said.

As for the government’s role in the geopolitical challenges facing it, Hayden said he has seen times that were more dangerous, but never more complicated.

The world order that has existed for the past 75 years “is melting away” and the world is less stable, he said.

Nations such as North Korea, Iran, Russia and Pakistan are “ambitious, brittle and nuclear.” The Islamic world is in a clash between secular and religious governance, and China, which he said is “competitive and occasionally confrontational” is facing its own demographic and economic challenges.

“It’s going to be a tough century,” Hayden said.

Anne Freedman is managing editor of Risk & Insurance. She can be reached at [email protected]