5 Critical Questions Workers’ Comp Execs Are Asking Themselves
As the new decade begins, many in the industry are wondering what’s in store for workers’ compensation in 2020.
From new technologies to the effects of the gig economy and an aging workforce, there are a lot of issues for workers’ compensation executives and insurers to keep their eyes on.
A new report from NCCI details the results from their 2020 Focus on 5 survey, which asked workers’ compensation insurance executives to name the top five issues they’re watching this year. Here’s what they had to say:
1) Can Insurers Preserve Rate Adequacy if Trends Shift?
According to the report, lost costs, as reported by ratings bureaus, have been declining for several years and industry leaders are taking notice.
There’s been slowed growth due to lower premiums, and business competition in the industry is increasing. With these market trends, issues of rating adequacy need to be addressed, and to do so, workers’ comp insurance executives have been investing in predictive analytics to help with pricing.
They’ve also begun dedicating more resources to actuarial research and analysis.
2) How Will the Aging Workforce Affect Workers’ Comp?
The fact that many people are working past retirement age has workers’ compensation executives watching claims frequency and severity.
The good news is that their experiences tend to make older workers safer workers. The bad news is their claims tend to be more severe and are more likely to have comorbidities attached to their claims than younger workers.
In addition to monitoring the impact of the aging workforce, industry leaders are also watching the increase in hiring of unskilled workers.
This uptick may be due to the fact that as baby boomers retire, there are fewer young people to fill their places. Thirty states reported a drop in the under 18 age bracket, according to Yahoo Finance, and the U.S. Census Bureau projects that by 2035 the number of U.S. citizens 65 and older will outnumber those 18 and under — a first in U.S. history.
As a result of these demographics, executives are spending more time educating others on the challenges the aging workforce could pose to workers’ comp.
3) What Does The Future of Medical Care Costs Hold?
As technology has advanced, so has modern medicine. New drugs, medical devices and treatments come out each day, making the industry better for patients overall.
With these new technologies, however, come new costs, and industry executives say that this makes it difficult to predict future workers’ compensation costs.
Workers’ comp insurers, fortunately, have been working with medical providers to make sure they are not over-prescribing medications or treatments.
4) How Will New Laws Impact the Gig Economy?
The survey found executives think the gig economy may not affect the industry as many thought it would. NCCI reports many are wondering if the gig economy will grow large enough to have a significant impact on workers’ compensation premiums.
The fact that many states are considering following in California’s footsteps and passing legislation to protect gig workers means this issue is still catching the attention of industry leaders, however. To address this issue, respondents say they’re looking for alternative forms of coverage to protect gig workers. They’re also closely watching legislation and court cases on these issues.
5) What Unknowns Will Changing Technology Bring?
While these devices will likely make workplaces safer, they come with a lot of unknowns that workers’ compensation insurers are on the lookout for.
The survey results noted insurers are adapting to the new technologies and exploring the data they deliver to consider alternatives for policy delivery systems. &