WC Market Trends

Workers’ Comp Insurance Price Firming Eases

Workers’ compensation insurance prices continue to rise, but significantly less than a year ago.
By: | February 16, 2014 • 3 min read

Employers renewing their workers’ compensation insurance continue seeing price increases, although market conditions are now more favorable than during 2013, several sources said.

On average, middle market employers nationwide are seeing renewal increases in the low, single digits, inching up to 10 percent for accounts with higher losses, said Thomas Delark, a middle market regional practice leader with Aon Risk Solutions. In contrast to a year ago, however, underwriters are less likely to walk away from accounts if they don’t immediately get the price they ask for, he added.

Large employers with large retentions, meanwhile, are experiencing price increases of less than 2 percent and even small decreases in some cases amid robust competition for their business, added Anthony DeFelice, managing director of Aon Risk Solutions’ national casualty practice.

Several factors continue to place upward pressure on workers’ comp insurance pricing, although less so than in 2013, according to a 2014 Insurance Market Outlook report that broker Wells Fargo Insurance Services USA Inc. released January 30.

“While increases will not be as high as 2013, we expect the majority of insureds to experience rate increases throughout at least the first three quarters of 2014 while potentially beginning to moderate in the fourth quarter.” — 2014 Insurance Market Outlook report

Factors impacting workers’ comp insurance pricing include worsening loss severity due to medical inflation and rising indemnity costs driven by issues such as obesity and opioid prescribing, according to Wells Fargo. Low investment returns and insurers’ use of predictive modeling to improve their risk selection are also among factors in play.

Wells Fargo’s report projects that policyholders with guaranteed-cost programs or poor loss experience will see 10-20 percent rate increases and “higher in problematic states such as California and New York and urban areas.”

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In general, insureds with low deductibles can expect increases ranging from 5 percent to 15 percent, while those with large retentions will see increases ranging from 0 percent to 5 percent, according to Wells Fargo.

But over the longer term, Wells Fargo expects the market will flatten because of state efforts to curb opioid prescribing, declines in claim frequency, and a reduction in insurer combined ratios due to higher product prices they have obtained over the past three years.

In some cases, small employers are already experiencing an improving trend.

Accident Fund Insurance Co. of America policyholders saw 8 percent to 10 percent rate increases, on average, during the first quarter of 2013, said Michael K. Britt, the Lansing based insurer’s president. But by December prices were rising only 2.4 percent.

While the workers’ comp line remains a challenge for insurers and insurance buyers alike, differentiating a policyholder’s risk profile will help purchasers take advantage of competition among underwriters, says a United States Insurance Market Report 2014 released February 7, by Marsh USA.

“Although carriers may continue to push for workers’ compensation rate increases, differentiating an insured’s risk profile in the market and an ongoing competitive environment should help reduce the magnitude of the push for pricing increases in 2014,” the broker’s report states.

Employers with workers concentrated in large cities, meanwhile face additional challenges.

During 2013 such employers experienced significant price pressure as workers’ comp underwriters have worried over whether Congress will renew the Terrorism Risk Insurance Program Reauthorization Act, before the insurance backstop expires on December 31.

The trend is expected to worsen during 2014 without congressional action, Marsh’s report states.

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.

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]