Predictions for workers comp insurance in 2018

Workers Comp Predictions

This entry was posted in Workers Comp by Joe PadudaHere, in no particular order are my educated guesses, considered opinions, and wild-assed speculations.1. M&A  – specifically big deals – will increase.I expect we’ll see more very large transactions this year, mostly driven by strategic purchases of other companies. Work comp is a very mature industry, scale and size matter a lot, and that means getting bigger is key.  Expect to see several billion-dollar plus deals in the service sector.2.  The market will stay soft.Claims frequency continues to decline, medical costs are pretty much under control, margins are healthy, and there’s still a lot of allocatable capital in the industry. Unless there’s some major  – as in huge – crisis I don’t expect a hardening of the work comp insurance market.3. Cost containment’s focus will shift to facilities and hospitals.Hospitals are increasingly vulnerable due to consolidation among payers, reductions in governmental program funding (thank you Trump Tax Bill), changes to Medicare reimbursement, and the systemic shift of care to lower-cost settings.  Facilities have already – and will continue to – look for revenues from payers less able to reduce reimbursement. That’s us, kids. Expect to see payers more closely analyzing facility costs, looking for solutions, and implementing programs focused on the issue.4. TPA growth will accelerate.Driven primarily by work comp insurers’ outsourcing. With a soft market, there’s little incentive for employers to self-insure, but the long-term decline in claims frequency is driving down insurer claim counts. Some insurers are making the strategic decision to shift claims to reduce fixed costs and capital investment requirements. Expect the big four TPAs to add significant new business from insurance companies and similar entities.5. Tele-everything will take offTele-triage, -medicine, -rehab, etc is going to grow quickly. Expect lots of activity from companies big and small; Concentra, MedRisk (HSA client), CHC Telehealth, Coventry, Work Comp Trust of CT and others are pushing this care delivery model hard – as they should. Expect thousands of “visits” will logged by the end of 2018.6.Claims counts will bump up In hurricane-ravaged Puerto Rico, Florida and Texas. Alas a lot of injuries and illnesses will go unreported as unscrupulous companies hire day laborers and don’t insure them, or, in Texas, where work comp isn’t required.7. But frequency will continue to decline, and total claims will too.because a) frequency almost always declines, and b) we are at or very close to full employment, so a growth in employment won’t counterbalance structural decreases in frequency.8. Work comp medical costs will increase slightlyOn a per-claim basis, expect costs were slightly higher in 2017 than the previous year. Per-claim figures are the best measure, although total medical spend is helpful as well. Kathy Antonello will tell us at NCCI’s Annual Issues Symposium in May…9. Innovative new approaches to financing work comp risk will emergeVariations of peer-to-peer such as Lemonade, some enabled by blockchain technology, will gain a toehold in a few states. Don’t expect there to be a major move just yet as the regulatory, capital requirements, and distribution channels are going to adapt slowly. That said, there’s just too much opportunity to reduce costs inherent in the inefficient administrative processes in today’s workers’ comp system.10. Payroll fraud incidents and other even more creative efforts to screw workers will increaseI’ll be looking at this in detail, but one quick take is the number of “contingent workers” in many industries has grown dramatically. The biggest increases? farming, fishing forestry; logistics; personal care; protective service, education and training. The implications for comp are deep and broad; lower premiums, claiming incentives, fraud.

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