Insight, analysis & opinion from Joe Paduda

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Monday morning catch-up

After eight days away, time to catch up on the goings on.  Lots happened, beginning with the non-renewal of the Terrorism Risk Insurance Act, aka TRIA.  Mark Walls’ solid summary of the non-event that is a big event is here; Peter Rousmaniere penned a piece in WorkCompWire on the issue as well.

Peter sees this as a non-event for all but the top layer of insurance execs, noting the researchers haven’t figured out what terrorism-related risks the work comp industry faces, what they’d potentially cost, and what the implications might be.

Here’s my quick take.

First, TRIA may not pass any time soon. The new Congress is more conservative than this one, and the strong anti-government involvement lobby in the current Congress had already significantly diluted TRIA before one of their members killed renewal hopes with a “hold” on the bill. Many members want to keep the gubmint out of private industry, however a RAND study indicates that in the event of an incident, non-renewal would cost taxpayers far more than renewal.

Second, this is a much bigger issue for other Property and Casualty lines than it is for workers’ comp. As Mark notes; “workers’ compensation is statutory, and carriers cannot exclude for cause, there cannot be terrorism risk exclusions on a workers’ compensation policy.”   Highly concentrated employee populations in highly visible locations (think Manhattan) are the most obvious risk; While carriers may not choose to write work comp in these areas, there’s always going to be a “carrier of last resort” that is obligated to provide coverage. 

That said, it isn’t quite that simple.  Big self-insured employers with excess loss policies may well find themselves without coverage for terrorism-related claims – however, they’ve known for almost a year that non-renewal was a possibility, so this shouldn’t come as a surprise.

This is one of those “you don’t know what will happen until it does” things.  While TRIA was in place, it had never been used so no one knows what conditions would have been covered (think PTSD). Relatedness and causation issues would have been rather complex, and coverage questions would have made the wind v water issues seen in flood insurance seem simple and straightforward.

What does the TRIA non-renewal mean for you?

Likely not much, unless you work for a large self-insured employer with big concentrations in NYC, LA, SF, Chicago, Atlanta and a very few other locations.

Health reform roll out

2015 enrollment projections from Avalere Health are around 10.5 million; initial enrollment for January 1 was running somewhat ahead of projections.  Notably, the federal health exchange website appears to be working well with minimal disruptions this time around. No news = definitely good news for the Administration.

There’s a useful graphic courtesy of the Kaiser Family Foundation detailing changes in coverage, cost, and cost-sharing over the last decade. It appears that – at least for now – the concerns over employers dropping coverage have not been borne out as less than 1% of employers are likely to drop coverage next year.  This is somewhat less than we saw in the “pre-PPACA” days.

CWCI released an excellent study of changes in inpatient hospital utilization between 2008 and last year; overall work comp usage was down by double digits, paralleling group health experience. Another data point – spinal implant usage was down significantly after SB 863, indicating the reform legislation may have had an effect on physician behavior. Hat tip to WorkCompWire for the news…

And speaking of over usage of spinal implants, news this am from WorkCompCentral that the good folk at the California State Fund are considering going after several dozen docs for possible involvement in the alleged Drobot kickback scheme. The WCC piece, authored by Greg Jones, provides an exhaustive view into various alleged schemes covering physician dispensing of drugs, kickbacks for patient referral, and other profit-generating business relationships.  It’s rather chilling reading.


Joe Paduda is the principal of Health Strategy Associates




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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