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Digital EditionIs Profitability Masking the Struggles of Workers’ Compensation Adjusters?
Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected].
A recent report from the National Council on Compensation Insurance produced some flattering numbers for private workers’ compensation insurance underwriters.
For the 10th year running, the line was profitable. Adding to the glow of stacked banknotes, it notched a combined ratio of 86 for the past two years. The NCCI stated that, in fact, private workers’ compensation underwriters have recorded combined ratios below 90 for seven years in a row. All well and good.
Not so alluring, at least from the perspective of those who might invest in the line, is that between 2003 and 2023, the overall share of net written premiums in workers’ compensation fell from 8% of the P&C net written premiums universe to 5%, according to the NCCI. While the overall P&C industry saw more than 10% growth in net premiums written, on average workers’ compensation private carriers saw 1% net written premium growth.
Of further concern is that there is other research out there that indicates that an important cog in the claims management machine — workers’ compensation claims adjusters — are not happy campers.
Heavy workloads, burnout and a feeling that they are being taken advantage of by their employers are the complaints we hear from the claims adjuster community.
Efforts are afoot to build generative AI models that could alleviate some of the more tedious or repetitive aspects of the adjusters’ work. Using a machine to harvest the most relevant pieces of information from medical records and place them at the fingertips of adjusters, for example, certainly sounds like a promising approach.
What will still be needed, regardless of how much workload AI picks up, will be veteran claims managers who can discern whether AI is presenting us with facts or something that its little machine brain made up.
Insurance overall is facing a talent deficit that, as many times as we mention it, still bears watching.
Leaders of workers’ comp claims organizations have been open about how much of a problem this is. They are losing more claims talent than they are picking up.
Generative AI does hold promise, but without claims veterans to oversee the work of younger workers using it, are we setting ourselves up to gain efficiencies or create more confusion?
Workers’ compensation executives and their marketing teams can be heard using the words “empathy” and “advocacy” for the injured worker as being helpful in producing good medical outcomes. That’s something everyone can get behind, if underwriters and their risk management partners really are walking that walk and not just talking it.
But what about advocacy and empathy for the very employees of their organizations?
If workers’ compensation claims and underwriting organizations are, on the one hand, saying they are all for empathy and compassion for the injured worker, and, on the other hand, falling short of extending that to their own employees in the form of less arduous working conditions, then we have ourselves a moral and ethical conundrum.
Anyone who loves insurance, who in fact may be an insurance geek, loves seeing consistent combined ratios that are below 90. It gives us a good feeling that somebody is managing something properly.
Let’s hope these shiny combined ratios in workers’ compensation are being arrived at ethically, and not on the backs of an adjuster community that is trying to figure out how soon it can throw in the towel. &
