The short answer is – they have little incentive to do so.
- Workers’ comp insurance is mandatory in all states save Texas. Pretty much all employers have to carry workers’ comp coverage, so sellers of insurance and self-insurance services (albeit to a lesser extent) know their prospects have a budget, timeline and decision process, and selection criteria. It’s not IF they buy, it’s whose they buy. That removes a big problem in sales – finding prospective customers.
- For most of the last decade, insurance rates have been dropping. Workers’ comp costs are at or near historical lows in almost every state. As a result, with rare exceptions, buyers aren’t focusing on workers’ comp – it is way down the list of things CFOs and Treasurers are worried about. So, they aren’t pushing insurers or TPAs to improve, get creative, develop new products and solutions and improve existing processes.
No problem – no need for a new solution.
- That’s driven primarily by two key factors – frequency and medical cost.
Frequency – the percentage of workers suffering an occupational injury or illness – has been dropping pretty steadily for decades. With fewer people hurt or sick every year, there’s fewer problems to solve. And yes, claim counts trended up till last year, but that upward trend was driven by increased employment.
- Despite what some vendors claim, medical cost trends are very much under control. Sure facility costs are increasing, but the decline in drug costs and related medical expenses seems to have offset that…so far. So, little incentive to come up with creative/fresh/different medical approaches.
- Risk:reward. With some notable exceptions workers’ comp execs are pretty satisfied with the status quo. Put another way, they are highly risk-averse. Most have ascended to their executive positions by not taking risks, by avoiding mistakes. Any new, creative, different approach is inherently risky and therefore anathema to folks who have succeeded in part by tightly managing risk.
By no means is this true of all execs; I’m privileged to be able to work with several payers that are pushing the boundaries, working very hard to come up with new and much better ways to help the injured workers and employers they work for.
What does this mean for you?
Workers’ comp buyers are mostly not interested in innovation or change.