A farce.

Ok folks, I’m gonna get snarky here.

First, there’s the title. I think they meant “insurers” not “insurance”… the latter is quite consistent across all insurers

A while back PropertyCasualty360’s reported on a “rating” of workers’ comp insurers by Forbes Advisor, an entity which doesn’t appear to take its ratings very seriously.

Everyone loves lists – done right they can reward the best and force others to up their game while helping consumers pick the best offerings. Done poorly they mislead, provide zero value, and result in buyers making decisions based on useless/misleading/wrong criteria.

In this instance, Forbes’ understanding of what makes for a “good” insurer is about as deep as my understanding of quantum mechanics.

In fact, the article looks like it was created by a beta version of ChatGPT with zero editing by anyone who passed a high school English course. (I did try to contact the author but there’s no link or contact info other than a name on Forbes’ website, and I’m not going to waste even more of my time trying to track this guy down)

okay, the details.

From PropertyCasualty360 (who really ought to know better):

Forbes Advisor based 90% of the scores [sic] the level of upheld complaints made to state insurance departments and collected by the National Association of Insurance Commissioners. The remaining 10% of the scores were based on the financial strength assigned to the company by AM Best.

Well. I’ll spare you, dear reader, my minor criticisms and focus on the major ones.

1. What??? 90% of the “rating” is based on complaints which have little to nothing to do with how good a business partner a carrier is.
2. What about cost, dividends, time to first report of injury, claim closure rate, claim frequency, sustained return to work…Jesus there’s about a million criteria more important than complaints to regulators.
3. That said, a major driver of complaints would be certainly driven by claim volume…so the bigger the insurer, the more likely they would a) have complaints and b) the more complaints there would be. No discussion of this in the “survey.”
4. Sometimes people complain because they don’t want to go back to work, don’t like having to go to specific providers, want brand drugs instead of generics, and on and on. Sure some of these complaints would likely be dismissed by regulators, but others would likely not be “dismissed.”
5. Financial strength – well, given many carriers are A, A – or A+ rated, how useful is this? Might as well say “hey, only buy WC insurance from an A rated carrier!”
6. What about:
   1. customer satisfaction?
   2. injured worker satisfaction?
   3. broker rating (be careful, but a whole lot more useful than “complaints”)
   4. claim closure rate?
   5. medical provider satisfaction?
   6. Net promoter score?
   7. employee rating of their employer e.g. Glassdoor?
   8. best places to work ratings?

The result is a wholly useless exercise which may encourage clueless buyers to make bad decisions based on a “survey” which looks like nothing more than clickbait.

I’ve seen better/more useful/more credible ratings for the top home margarita blender kits, highest rated shoelaces and best pencil erasers.

What does this mean for you?

Another sign of the impending apocalypse. 

The Triangle Shirtwaist Fire was the horrific result of unregulated capitalism. 146 people – mostly women -burned to death or were smashed on the pavement nine stories below the factory floor when fire raged through their Greenwich Village workplace.

The mind reels when contemplating the last moments of the victims, who moments before had been looking forward to a Saturday night with friends and family, and a Sunday (gasp!) off work. When the fire below burst through the stairwells and floor it found bins of dry cotton, wooden worktables, beams, walls and floors.  There was no escape – the owners had locked the exit doors. The conflagration exploded in seconds, and women and men young and old were gone in moments.

And yes, this was foreseen, and preventable. This from David Drehle:

Despite the New York City fire commissioner’s well-publicized prediction that a deadly blaze in a high-rise loft factory was inevitable — and despite multiple small fires during working hours at the Triangle — the owners ignored a consultant’s advice to perform regular fire drills to train workers for an emergency. And they declined to enforce their posted rule against smoking near the highly flammable cotton scraps their workers snipped by the ton.

Long ignored, for over a century there was no memorial, no permanent reminder of the tragedy, no tribute to the mostly-immigrant women who died that awful day. That ended when Mary Ann Trasciatti and others’ relentless effort culminated in this…the steel runs along the building, listing names and ages of the victims and quotes from survivors. It will be completed early next year.

Good friend and colleague Rick Sabetta reminded me of this, and I am indebted to him.

What does this mean for you?

We would be well-advised to learn a lesson from days past, a lesson seemingly ignored by those looking to employ young kids in dangerous jobs and downplay the very real dangers of heat exposure in agriculture and logistics.

Old coal-fired electric plants are being converted to manufacturing, residential, office, and recreational uses. These are massive undertakings involving dismantling giant buildings; taking down crumbling smokestacks; removing hundreds of tons of asbestos; shredding hundreds of tons of steel, copper and aluminum; and hauling hundreds of truckloads of debris.

photo credit Daniel Lozada, NYTimes

Then there’s site remediation to clean up hazardous and dangerous residues from decades of processing and burning coal.

Developers estimate around 20 coal-burning plants are candidates for this type of re-development; many others may be taken down as well. A quick scan indicates a plurality of plants are located in Michigan, Texas, Indiana and Tennessee. 

Once the demolition and remediation is done, it’s time to build – and not just commercial and residential projects. One of the main attributes of these plants is they are tied into the grid, making them prime locations for green energy production in the form of solar and wind farms.

From the NYT:

In Illinois alone, at least nine coal-burning plants are on track to become solar farms and battery storage facilities in the next three years. [emphasis added] Similar projects are taking shape in Nevada, New Mexico, Colorado, North Dakota, Nebraska, Minnesota and Maryland. In Massachusetts and New Jersey, two retired coal plants along the coast are being repurposed to connect offshore wind turbines to the regional electrical grids [emphasis added]

Building and operating renewable energy projects has long been cheaper than fossil fuel plants. The barrier “is not economics anymore,” said Joseph Rand, a scientist at the Lawrence Berkeley National Laboratory, which conducts research on behalf of the U.S. Department of Energy. “The hardest part is securing the interconnection and transmission access.” [which is not an issue when old coal plants are re-purposed]

Which all translates to lots and lots of very well-paid workers doing risky work for years.

What does this mean for you?

More workers’ comp premiums and claims.

Few would argue that work comp services is largely a commodity industry…“price” is the ultimate decision criterion in many most buying decisions. There are exceptions, but many are really service guarantees backed by financial penalties…another way for purchasers to demonstrate fiscal prudence.

aka, “strategy” often devolves to attempts to escape the commodity trap.

The first step is to understand what’s lost in the typical sales process is the “value” inherent in the service. 

Way back in 2009 I wrote this:

For several years bill review has been [and still is] a commodity.

Despite vendors’ best efforts to differentiate, most buyers place great emphasis on price. As a result, bill review vendors have worked hard to squeeze out cost…bill review vendors have lost sight of their reason for existence – to ensure their customers pay only what they legally are required to. Instead they compete on the basis of how cheaply they can write checks out of their customers’ checkbooks.

This is not entirely the bill review vendors’ fault. Their customers bear much of the responsibility for the situation, playing vendors off against each other in an effort to reduce the payer’s admin expense. And the payers have succeeded. That success has come at a cost which some payers are only recently beginning to grasp [and now, 14 years later, many payers still don’t].

This is NOT unique to bill review...lazy buyers and brokers/consultants usually commoditize claims, networks, clinical services, occupational medicine, Medicare Set Asides and other services.

Why?  Because it is easy, requires little effort, and, frankly, vendors fail to focus on value.  Rare indeed is the service company that really, really trains its sales folks, or invests in market research, or has any concept of branding. So, yeah, it’s on the vendors too.

Value starts with understanding how your customers define success…and by “customers” I mean the individuals who will make and influence the buying decision.

What does this mean for you?

Organizations don’t buy – people do. But if you do not KNOW what the buyer values, you can’t get out of the commodity trap.

More…

this from an excellent Harvard Business Review piece...

price does equal value in the eyes of a customer when all other strategic factors in the purchase decision are equal, which often occurs with commodities.

Many other products and services are customized rather than commoditized, and, in these cases, price doesn’t equal value. Steve, for example, is CEO of a kitchen design and installation company specializing in large and expensive homes. When his inquiries dropped, he leapt to the assumption that he was “too expensive.” So, he embarked on a round of price cutting. But was cost really the issue? To find out, we assisted by interviewing some of his clients who chose a competitor. A typical example was Jenna.

She’d sought three quotes for the kitchen of her large home. “They came in at different prices, naturally,” she said. “I could have bought a new car at the prices supplied.” She explained that the kitchen contractor she chose wasn’t the cheapest. More important to Jenna were four other factors: innovative design (she spent a lot of time with each contractor trying to find the best design solution), work quality (recommendations from previous customers about kitchen finishes), customer service (easy to deal with and good listening skills), and quality of inclusions (the brands of dishwasher, sink and taps recommended).

The final factor, she said, was “trust.” It was “very important because she wasn’t going to be there every day checking on the installation of plumbing and electrical fittings.”

Your position on the scale of commoditized vs. customized depends on how much unique value you contribute to your products

If you – the service provider – don’t fully understand what your customers value AND are able to clearly and crisply articulate how your company can deliver that value, you’re forever going to compete on price.

And in the highly mature, scale-centric, declining industry that is work comp services guarantees ever-lower prices and ever-lower profits.