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Aug
21

Workers’ comp – the near-term outlook

NCCI’s just-published assessment of work comp trends has a wealth of information, much of it well worth contemplation by anyone in the industry.

Here are a few takeaways that jumped out at me.

  • Overall the current state of the market is steady – the market and rates are firm, premiums are trending up modestly, frequency is continuing its structural slow decrease, and claims cost inflation appears to be well within acceptable ranges.
  • Employment has returned to its pre-recession level, yet the percentage unemployed remains above 6 percent.  Employment drives premium so that’s good news, however there’s plenty of room for that percentage figure to drop even more.
  • More specifically, employment in manufacturing and construction, traditionally high-premium industries, remains lower than it was before the recession.  If this picks up significantly, so will work comp premiums and rates.
  • If investment yields remain low, we may well see premiums increase as insurers seek to offset the decline in ultimate cash flow.
  • Medical trend is pretty low as well as the work comp world’s experience parallels group and governmental program results.

Which leads to the key questions – what could change the outlook from “steady”?

  • A surge in employment especially in construction will increase injury risk and premium volume.
  • Continued low investment returns may force insurers to raise rates.
  • An uptick in medical inflation – perhaps due at least in part to cost-shifting – could lead underwriters to push rates up quickly.

What does this mean for you?

Lots of ifs and maybes; fortune favors the alert.

 

 


2 thoughts on “Workers’ comp – the near-term outlook”

  1. Thanks Joe…interesting insights. I would think the industry is adjusting to the recession. I also think that employers, physicians, nurse case mangers and other members of the team are working together to reduce the impact of work place injuries….Also, consumers realize that work is important- thus possibly reducing claims that are borderline and returning to work.

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Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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