Hold on, because this isn’t going to end up where you think it is.
The comp insurance business is shrinking. Insurers are increasingly outsourcing claims function to TPAs, and TPAs are looking to move more claim-related activities in-house to capture more of a shrinking pie.
Sure, carriers including AmTrust and the Berkshire companies are growing by leaps and bounds, but most others are moving in the opposite direction. And yes, our friends in California have seen earned premiums increase – and as the largest state by far we can’t ignore that. However, insurer profits have remained solid while rates while the last two years have seen frequency drop – the first time this has happened since the Bush Recession.
Margins are very healthy, markets are competitive, and the business remains solidly profitable.
Over the last 22 years, only one saw a material increase in claim frequency.
After 2 years of essentially flat trend rates, 2016 saw a 5 percent jump in claim severity.
Work comp premiums have been flat since 2015 as decreasing claims costs and insurer discounts have balanced out higher payrolls. Overall, it looks like more employers have seen their premium rates decrease than increase.
Those aren’t just a jumble of unrelated facts and figures, rather a combination of causes and effects, all leading to an inescapable conclusion – industrial accidents and illnesses are less common than they used to be, and more common then they are going to be.
Here’s a major one. More insurers appear to be looking to outsource claims, generating growth and jobs in the TPA industry which is one of the few sectors that’s seeing this.
The service sector has consolidated rapidly with two huge PBMs dominating the pharmacy space; physical medicine owned by two other firms (one of which, MedRisk, is a client); Genex increasing it’s position as the largest case management provider, imaging already the domain of OneCall, and three bill review tech firms where once there were six. Other examples abound, all driven by the inevitabilities of a mature industry.
Yes, smaller companies, innovators, and new entrants can and are doing well, but these are by far the exception rather than the rule. Fact is, external factors and technology are rapidly shrinking workers’ comp.
I’m more than a bit frustrated by this.
I see work comp as one answer to the mess that is health care. We actually care about, and work to restore, functionality, an “outcome” that few in the group health, Medicaid, or Medicare world grasp.
What we do – when we do it right, which is all too uncommon – is what they should do – deliver care that gets the patient healthy again – defined as able to do what they did before, if not do it better.
Those pinheads in DC are arguing over insurance – which is NOT the problem.
They should be talking about why our nation’s healthcare is so crappy, and why healthcare we all pay for, and get, and that our loved ones get, doesn’t work a hell of a lot better than it does today.