5 Pressing Issues Workers’ Comp Execs Are Focused on in 2022

From the talent gap to rate adequacy issues, here are five trends workers' comp industry leaders highlighted.
By: | January 28, 2022

COVID-19 isn’t going away. The talent gap will pose major problems for workers’ comp and many of the industries it protects. More and more, companies need to ensure they are using the proper technology to keep up with competitors.

Going into 2022, these are just a few of the issues workers’ comp executives are watching. Throughout all these changes, a commitment to a patient-centered approach will remain important. 

“Workers’ comp today, and in the future, is focused on the injured worker and a patient-centered approach to care,” said Diane Blaha, chief marketing officer at CorVel. 

To better understand the trends affecting the industry, Risk & Insurance® talked to workers’ comp industry leaders and examined the results of NCCI’s “An Evolving Landscape for Workers’ Compensation.” 

1) The Talent Gap and the Great Resignation

The number one trend industry pros flagged for 2022 was issues stemming from talent gaps and the great resignation. Nearly two-thirds of workers are looking for a new job, and 88% of executives are seeing higher turnover than normal, according to a survey by the consulting firm PwC. 

This problem isn’t unfamiliar to those in the workers’ compensation and commercial insurance industries. They’ve struggled to attract talent for years. Before 2020, it was estimated that the insurance industry as a whole would need to fill 400,000 open positions.  

“The number one tool that every company is going to need in 2022 — and for as far into the future as we can see — is superb employees. There’s just no substitute for smart, empathetic human beings for the work we do in this industry,” said Reagan Pufall, president and CEO of Omaha National. 

Beyond personnel shortages within the workers’ comp industry, many of the employers who purchase workers’ comp policies are also having trouble finding workers: “I can’t remember the last restaurant I went into that didn’t have a ‘We’re hiring’ sign up,” said Matt Zender, senior vice president, workers’ comp strategy at AmTrust. 

New and inexperienced workers are more likely to injure themselves on the job. More than one-third of non-fatal work-related injuries in 2019 happened to employees who had been in their current position for less than a year, according to Bureau of Labor Statistics Data. 

With an increasing number of employees starting new jobs, workers’ comp professionals should brace themselves for a year where injuries may become more common.  

2) The Role of Technology and Insurtech

“I think that the big trend everybody’s thinking about and paying attention to is technology,” Pufall said. 

Though the sector has long been a laggard when it comes to adopting new technologies, experts predict 2022 will finally be the year workers’ comp fully embraces a whole host of digital tools. 

“It is time to embrace change,” Blaha said. “We need to be more creative and innovative in our solutions, and we need to be open to new technologies and new processes that will significantly improve outcomes.”

The pandemic increased the adoption of tools like telemedicine. The period between March and June of 2020 saw 7-13% of medical claims utilizing telemedicine services, compared to just 2% during the same time period in 2019, WCRI reported. 

Pufall expects that we’ll see increased adoption of analytics, Insurtech and claims management tools within the next year. Though many turn to outside vendors for their technology needs, some insurers, including Omaha National are developing tech solutions in-house. 

“Everybody knows that if you fall behind in technology, you’re going to pay a price,” Pufall said. “We design our own software and develop it in-house.”   

3) Rising Medical Costs

Inflation isn’t just increasing the costs of gas and eggs. It’s affecting medical treatments as well.

Health care services rose at a two percent rate year-over-year, the nonprofit health care analysis group Altarum found in October of 2021. While that is a lower rate than the 6.2% price hike for consumer products, it could increase in the near future.

The talent crisis in the health care sector could drive up prices, as hospitals may have to increase their pay, benefits or hire temporary help to keep up with the demands of the pandemic. Health care facilities may make up for these additional costs by charging higher prices for their services, Vox.com reports. 

And what affects the health care industry at large also affects workers’ compensation, especially since the industry often pays more than group health for similar services.  

Though medical costs are rising, new technologies like telemedicine could help control costs, by introducing more efficiency into the workers’ compensation system. Virtual care will continue to be a popular option in the industry. 

“Adoption and expansion of virtual care services is a trend that isn’t going away anytime soon,”  Blaha said.  

4) Rate Adequacy

Inflation, staffing shortages and declining injury frequency could all contribute to rate adequacy issues within workers’ compensation.

As businesses struggle to attract and retain talent or if they laid off or furloughed staff, driving down the costs of premiums since payroll will be reduced. Added to that, injury frequency and severity is declining in most areas, leading to lower premium costs for employers. 

These factors could lead to rate adequacy issues for carriers.  

“This is an industry that is always in need of price discipline,” Pufall said. “I really think that every workers’ compensation company would do better if they pursued a strategy of setting prices that allow them to generate an operating profit and really focus on accident year loss ratios.”   

5) The Continued Effects of the COVID-19 Pandemic

As the Omicron variant of the SARS-CoV-2 virus sweeps across America, COVID-19 and its effects on injured employers remain a top concern for workers’ comp professionals. 

Though many may be feeling burnt out as we head into year three of this pandemic, it’s important to remember that we now have a lot more tools available to fight the virus. Vaccines, masks and social distancing all help prevent the spread of the virus. 

We also know that in most cases, COVID-19 doesn’t incur medical costs for workers’ comp. A study of Mitchell’s 2020 claims data found that 25% of COVID-19 workers’ compensation claims incurred medical costs, while the other 75% only had indemnity costs. 

If a worker does become sick, doctors and nurses have more experience treating COVID-19 and its after effects. “The industry needs to lean on clinical expertise and interventions for workers that have been impacted by COVID-19,” Blaha said.  

Even when the pandemic eventually subsides, long-COVID, which affects between ten and 30% of people who contract the virus, will still be with us. The disease, which symptoms include organ damage, fatigue, brain fog and shortness of breath among dozens of other symptoms could have long-term disability implications for the industry. 

“​​We believe that the impact of COVID-19 and long-haul COVID will continue to be a critical focus for 2022,” Blaha said. &

Courtney DuChene is an associate editor at Risk & Insurance. She can be reached at [email protected]

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