Facing the Road Ahead
There are both new and evolving challenges facing workers’ comp practitioners in the coming years. But there is also an increasing level of sophistication among those who are working to meet those challenges.
Top carriers came together for a meeting of the minds for a session entitled “Workers’ Comp Insurance Exposed: Views from the Industry’s Leading Carriers.”
The session, presented at the 2014 National Workers’ Compensation and Disability Management Conference & Expo in Las Vegas, was led by Eric Silverstein, senior vice president and risk management leader for Lockton Cos., included participation from Russell Johnston, casualty president for the Americas Region with AIG Inc.; Debbie Michel, executive vice president, commercial markets with Liberty Mutual Insurance and president of Helmsman Management Services; and Sean D. Martin, vice president with The Travelers Cos.
One development carriers are encouraged by is an increase in employers exploring benefits integration, bringing together disability, health care and workers’ comp.
“The challenge is that many customers look at it in a bifurcated way,” said Johnston. A more unified approach can help employers address the issues that affect outcomes across the spectrum, which are of increasing concern for employers as ongoing economic woes continue to force older employees to work as long as they’re physically able.
A more holistic approach can help improve outcomes from both the occupational and the non-occupational sides by working to improve the overall health of the employee population.
“If you have a healthy employee, regardless of age,” said Johnston, “you’re going to have a better outcome.”
The potential to positively affect outcomes and cut costs across the whole of an employee population can also provide substance for workers’ comp professionals trying to make the business case for wellness investments such as on-site gyms or an on-site nutritionist, Johnston said.
Going forward, there are plenty of positives to build from, panelists said. Currently, 22 states have filed for rate decreases.
“If there’s any point in time where I think the industry has been exceptionally good at risk selection and pricing, it’s today,” said Johnston. And employers that have been diligent about managing their risk profiles can expect significant improvement.
Still, there’s a great deal of room for improvement, as evidenced by California’s ongoing challenges. Despite the most recent round of reforms, California is still plagued by dramatic increases in injury frequency and severity, and by crushing backlogs in the independent medical review process.
The uncertain fate of TRIA’s renewal is still on the radar for employers as well as carriers, but panelists said they are cautiously optimistic.
They are somewhat more concerned about other looming threats such as physician capacity and hospital consolidation, the Affordable Care Act, and cost shifting into the workers’ comp space, said Martin.
Carriers are also closely watching the development of interest in workers’ comp alternatives.
The formation of ARAWC – the Association for Responsible Alternatives to Workers’ Compensation – by many large companies is a clear sign that there is interest in an expansion of alternatives to state workers’ compensation systems, such as the nonsubscriber system in Texas and the recently enacted Oklahoma option, to other states.
In the end, said Michel, it will be up to states to find the “balance between doing the right thing for the economy and doing the right thing for the injured worker.”