Barring some catastrophic exogenic event (war with Iran, pandemic, sudden recession) – workers' comp premiums will continue to shrink.
Meanwhile, despite compelling evidence work comp execs are worried about the opposite problem – that they won't be able to raise rates high and fast enough if something bad happens. This at a time when industry profits have never been higher, insurers are awash with cash and all indicators point to continued low combined ratios.
Claim frequency continues to decline (yes there are increases here and there but these are NOT altering the decades-long trend). I penned a four-parter on frequency a while back that provides more detail.
The large and mid-sized payers I speak with are seeing declines in claim counts.
Medical costs are flat – and have been for several years.
The real issue facing C-Suiters is declining premium dollars – which means less money to pay for administrative expenses – which means fewer dollars to invest in:
IT and new IT projects
revamping claims systems
electronic connections to providers, vendors, and other third parties
adjuster training and retention
I get that CEOs have to do worse-case scenario planning – but the chances of that worst-case (claim costs increase and rate increases can't keep up) happening are minimal. Yet this “problem” is top-of-mind (according to NCCI) – so execs are:
investing in predictive analytics to help with pricing and dedicating more resources to actuarial research and analysis. Insurers are closely evaluating and monitoring risks for the purposes of acceptability, pricing and coverage.
Opioid users' claim costs are more than double non-opioid users. As usage plummets, rate decreases lag far behind. The result – today's rates are based on what happened years ago – not what's happening now.
Disclaimer: WorkersCompensation.com publishes independently generated writings from a variety of workers' compensation industry stakeholders. The opinions expressed are solely those of the author and do not necessarily reflect those of WorkersCompensation.com.