“If we didn’t come up with the idea, it isn’t worth considering.”
“That can’t be a good idea, we didn’t think of it.”
“Why would we listen to anyone from outside our company; we’re the biggest/best/most experienced/industry leader.”
Those are just three of the statements I’ve heard from large work comp insurers over the last two decades – all from insurers who’ve fallen far from their glory days of market dominance. They may seem ignorant, or dumb, or even kind of funny – but they were real.
Sitting comfortably in leather chairs behind their nice desks, the men who made these statements were completely secure in their belief that their company, their way of doing things, their mindset and culture were completely infallible.
How wrong they were. As easy as it is for us to see that now is how impossible it was for them to see reality then.
The next five years are going to bring profound changes to workers’ compensation, changes which – by definition – will make many of today’s business practices obsolete. It isn’t hyperbole to say that unless you completely revamp the processes, systems, technology applications, and metrics you use today, you’re toast tomorrow.
We are seeing that with Liberty’s progressive de-emphasis of workers’ comp. With the increasing outsourcing of claims functions to TPAs. With the rapid growth of what were relatively small players just a few years ago.
And that’s just the beginning.
All these changes have been driven by lower work comp claims frequency – that’s not new news to anyone. But hidden behind this is another major driver – the continued inability of major insurers to understand the business they are in.
Work comp insurers are in the business of managing medical and disability. While many think that’s what they are doing, they aren’t. Their claims management approach, predicated on the disproven model of huge provider networks delivering discounted care and the medical model of disability, overseen by overworked and under-resourced claims adjusters reporting to executives steeped in claims who don’t understand medical issues at all, only seems to work as long as premiums stay high and frequency continues to decline.
Wrenching changes are coming to employment, job availability, workplace demographics, trade and safety nets, changes that the industry is completely unprepared for.
Not to worry; the powers-that-be will schedule meetings, draft memos, write white papers, and do re-org planning, most of which will be completely ineffective, except insofar as it makes the execs feel like they are doing something. They’ll get rid of managed care departments, expertise, programs because “those programs haven’t worked.”
Of course they haven’t, because they were either the wrong programs to start with (percentage of savings network models) or the execs didn’t force adoption of intelligent medical management on a recalcitrant claims culture.
I see this happening all around the industry, and it’s like watching Antarctica melt. By the time these worthies figure out it’s real, they’ll be floating towards the tropics on a rapidly-melting iceberg.
With no landfall in sight.