Posts Tagged ‘trends’

OSHA under President Trump: early signs

Wednesday, January 25th, 2017

We’re still awaiting an appointment to the Department of Labor under the Trump administration, so we don’t expect an Occupational Safety and Health Administration (OSHA) director to be named until after that. Right now, a hearing for the controversial Andrew Puzder as secretary of labor is scheduled for February 2. Part of the controversy related to the fast-food CEO revolves around numerous civil rights suits that his company has logged.

In the National Safety Council’s Safety + Health Tom Musick reports that legal experts are predicting significant changes for worker safety regulation under the new administration in his article OSHA under Trump: A closer look.

Here’s a summary of the article’s key points:

  • Labor-law experts predict that OSHA will move away from an enforcement-based strategy and toward compliance assistance and cooperative programs for employers.
  • OSHA’s funding could decrease, and the way it spends its funds also could change if Trump limits the agency’s enforcement budget.
  • Recent regulations such as the injury and illness recordkeeping rule, the silica rule and the so-called “blacklisting rule” all could be in jeopardy under the Trump administration.

For another take at the crystal ball, Russell Carr has issued two in three-part series of articles on potential changes at EHS Today. Carr comes from the perspective of an owner of an environmental, health and safety consulting business.

In looking at changes that may be in store for OSHA and other regulatory agencies, it’s instructive to look at the broader context of some steps that have been taken early in the new administration.

Hiring freeze

On his first day in office, President Trump issued a hiring freeze on non-military federal employees and, at least for some departments, on grants and contracts.

“President Donald Trump’s hiring freeze will last only as long as it takes his administration to come up with an alternative attrition plan, according to a memorandum released by the White House Monday, and could provide broad exemptions for agency leaders.

Trump said his hiring moratorium would “be applied across the board in the executive branch” and apply to any positions vacant as of Jan. 22. It would bar agencies from creating new positions. Agency heads can exempt positions they deem “necessary to meet national security or public safety responsibilities.”

The hiring freeze is expected to be a precursor to federal job cuts of as much as 20% in some departments and was issued to counter “the dramatic expansion of the federal workforce in recent years.” An article at Government Executive points out that there has been no federal workforce expansion and that “employment by the federal government as share of all US employment is relatively low compared to most of the last 70 years.”

Opponents to the freeze point to several potential unintended consequences: Trump’s Federal Hiring Freeze May Kill Hundreds of Jobs for Nurses, Scientists and Engineers

Unions and veterans groups say the federal hiring freeze would make the government less efficient, and make it harder for the US military personnel to find jobs when they leave the service. (About a third of all federal hires are military veterans, although if they’re working security positions, for example, they may not be affected).

The freeze could also take off the table thousands of well-paying jobs for US citizens with higher education and specific skills.

Federal employees have other reasons to feel pressure, among them the recent reinstatement of the Holman Rule: House Republicans revive obscure rule that allows them to slash the pay of individual federal workers to $1:

The Holman Rule, named after an Indiana congressman who devised it in 1876, empowers any member of Congress to propose amending an appropriations bill to single out a government employee or cut a specific program.

The use of the rule would not be simple; a majority of the House and the Senate would still have to approve any such amendment. At the same time, opponents and supporters agree that the work of 2.1 million civil servants, designed to be insulated from politics, is now vulnerable to the whims of elected officials.

Information lockdown – temporary or a sign of things to come?

There’s always a level of anxiety in the federal workforce when a new administration takes the reins, but one other issue has been causing a level of discomfort among employees. Numerous news reports reveal an information crackdown on staff in various federal agencies, from the the Environmental Protection Agency to Departments of Agriculture, Health & Human Services, and the Interior. In its article Trump clamps down on federal agencies, The Hill reports:

It’s not unusual for incoming administrations to seek control over agency communications, especially at the outset, when Cabinet secretaries aren’t in place.

But experts on the federal workforce say they have never seen a White House take the type of steps Trump’s administration has to curb public communications.

Restrictions are reported to include press releases, photos, tweets, speaking engagements, fact sheets, news feeds, and more. See a related story at Politico: Information lockdown hits Trump’s federal agencies. Hopefully, this will be short-term in nature, but one that we will be watching – by early indicators, it doesn’t seem as though an open “sunlight” approach to communications will be a core value of this administration.  if we were putting money on it, we’d bet that it’s just a matter of time until OSHA’s recordkeeping rule is toast, particularly in light of pending lawsuits challenging the rule and Trump’s recent promise to roll back regulations by somewhere int he order of 70-80%.

See our prior post:  Reading the tea leaves: The Trump administration and OSHA

 

2016 in Review: Workers Comp, Risk Management & More

Tuesday, January 3rd, 2017

b-depositphotos_36634505_s-2015

2016 was both a hair-on-fire and a pants-on-fire kind of year – so much so that the Oxford Dictionary chose “post truth” as its Word of the Year. In case you’ve been buried in a crypt this year or on a desert island (and who could blame you?) here’s an explanation of how they arrived at that choice. Strangely, “fake news” didn’t even make their list, but you can read the runners up.  You shouldn’t find much in the way of fake news here in our post today – we’re looking at key workers comp, insurance and related stories for 2016 – along with a few predictions  for the upcoming year.

First, a look back at the news of 2016

Business Insurance: Most popular workers compensation and safety stories of 2016

Business Insurance: The BI Top 10 of 2016

Insurance Journal: Top 12 Insurance Trends and News Stories of 2016: Countdown

SHRM: Top 5 Risk Management Articles for 2016

Safety News Alert: Top workers’ comp cases of 2016 Part 1: The issues and Top workers’ comp cases of 2016 Part 2: Unique circumstances

DOL Blog: Top 10 OSHA Citations of 2016: A Starting Point for Workplace Safety

OSHA: Worker Fatalities Reported to Federal and State OSHA

Safety News Alert: Top 10 OSHA stories of 2016

Paduda: 2016 predictions – how’d I do?

EHS Today: America’s Top 10 Safest Companies Awards

WorkCompWire: Leaders Speak: 2016 Year in Review

Workerscompensation.com CA Dept of Industrial Relations Releases 2016 Legislative Digest With Overview of New Laws

Claims Journal’s Top 10 Legal Articles of 2016

Terms + Conditions: Top 10 Posts of 2016

Fierce Healthcare: 5 notable physician practice headlines in 2016

Heath Affairs: The Most-Shared Health Affairs Articles of 2016

Medgadget’s Best Medical Technologies of 2016

Insurance Journal: Top 10 ‘Most Ridiculous’ Lawsuits of 2016: Chamber of Commerce

Human Resource Executive: Top HR Stories of 2016

HR Morning: Top 10 biggest HR stories of 2016

HR Daily Advisor: Top 20 HR Strange But True Stories for 2016, Part 1 and Part 2

III: Insurance Industry Employment Trends: 1990-2016 

Insurance News Net: ‘Rotten Apples’ Kept Authorities Busy In 2016

PropertyCasualty360: 9 fraudsters join the 2016 Insurance Hall of Shame

Looking ahead to 2017

Is it just us or is the world a little too volatile right now for the usual torrent of predictions for the coming year? Here are a few intrepid folks who step out into the abyss:

Paduda: Whither Workers’ Comp in 2017 — Part I and Part II

Risk & Insurance: 2017 Insurance Executives to Watch

Risk & Insurance: Next-Level Solutions for 2017

Occupational Health & Safety Magazine: Looking Ahead to 2017 Automation Trends and Impacts

LinkedIn: The Freelance Economy: Top Trends to Watch in 2017

CBS News: Tech trends to watch in 2017

Bloomberg: The Pessimist’s Guide to 2017

Of general interest

New Yorker: The Five Biggest Business Stories of 2016

USA Today: Trump, turmoil: The top 10 business stories of 2016

Dave Barry’s Year in Review: 2016 — What the … ?

76 of Donald Trump’s many campaign promises

TSA’s Top 10 Most Unusual Finds: 2016 (Video)

The Atlantic: Second Helpings: 2016’s Underappreciated Science, Tech, and Health Stories

Longreads: Best of 2016: Business & Tech Reporting

New York Times: The Year in Pictures

Google: See what was trending in 2016

Twitter #ThisHappened in 2016

 

Wearable technologies: the next frontier in workplace safety

Wednesday, April 9th, 2014

The use of health monitors and fitness trackers have exploded in recent years — but expect the next frontier in wearable technologies to be in the workplace. The implications for worker safety and productivity are promising. While Google first introduced its revolutionary Glass to consumers, the current marketing direction is aimed at custom work applications.
One example of this is Patrick Jackson, a firefighter in North Carolina’s Rocky Mountain fire department: This Firefighter Built His Own Google Glass App And It’s Saving Lives.
Jackson is also a member of the Google Glass Explorer program and has developed an app that displays incoming emergency dispatches, shows maps of where incidents are, nearest fire hydrants, and even building plans. You can see a brief demo of Glass at work in the short clip, below. In addition, “Jackson is also working on a CPR assist app for Glass, measuring the speed of compressions, and whether you need to speed up or slow down based on sensors that detect head movement. He’s teaming with a Michigan startup called team (evermed) during his days off from the department, where he spends 10 days per month working grueling 24-hour shifts.”

The article also suggest another work safety application in DriveSafe, a Google Glass app that uses infrared sensors to detect when you doze off and to issue alarms to wake you and direct you to the next rest area.
PC World takes a look at other potential workplace applications for smartglasses , noting that, “The future of smartglasses will be realized by a factory worker operating a 3000-pound stamp press, not a gamer stomping on virtual-reality bad guys. Face computers will be all about scanning bar codes on cardboard boxes, not scanning tourist attractions for augmented reality overlays.” They present a variety of work scenarios, from hands free scanning and troubleshooting to safety applications.
FierceCIO explores the topic further in Making wearables a good fit for workplace safety. They discuss potential safety applications and suggest that gaining optimal value from wearable devices will require IT departments to innovate with software applications, data management and administrative protocols and policies.
We’re really just at the threshold of wearables in the workplace. To see more of the opportunities, this excellent Deloitte University Press primer by Shehryar Khan and Evangeline Marzec on Wearables is helpful in exploring the potential of everything from productivity, training and worker safety:

“Wearables’ value comes from introducing technology into previously prohibitive environments–where safety, logistics, or even etiquette have constrained traditional technology solutions. Wearables can be the first seamless way to enable workers with digital information–especially where hands-free utility offers a clear advantage. For example, using wearables, workers in harsh environmental conditions can access data without removing gloves or create records without having to commit data to memory and then moving to a sheltered workstation.”

Wearables are not without their HR and IT challenges. Susan Kuchinskas explores some of these issues in Forbes: How To Prepare Your Business For Wearable Technology. Also see:The Wearable Technology Revolution: Is your workplace prepared?

Year End: A Look Back at 2013, A Look Ahead to 2014

Monday, December 30th, 2013

We’ve gathered some year end wrap-ups as well as some predictions for the year ahead.
A look back at 2013

2014: A look ahead

Insourcing: A positive trend for U.S. manufacturing

Tuesday, December 4th, 2012

For decades now, it’s been almost axiomatic: manufacturing is better offshored. Conventional wisdom, talking heads and campaigning politicians alike would have you believe American manufacturing is dead, killed off by greedy unions, high taxes, and an onerous regulatory climate. China, Taiwan, Mexico, and other emerging economies offered a seemingly ideal business climate without most of these pesky problems.
But not so fast. Paraphrasing the great Mark Twain, reports of manufacturing’s death may be greatly exaggerated. Some manufacturers are questioning the wisdom the offshoring trend and, in a move that might be called “repatriation,” some big name companies are re-establishing domestic operations here in the U.S. or simply making the strategic decision to keep operations here.
This month’s Atlantic Magazine features a must-read article by Charles Fishman — The Insourcing Boom — which talks about how General Electric is moving much of its appliance-manufacturing operations back home to Appliance Park in Louisville, Kentucky.
In the late 1960s and early 1970s, Appliance Park was the quintessential American manufacturing operation, employing 23,000 at its peak in 1973. But after years of offshoring jobs, the site became a ghost town. In 2011, the Park’s employee population was down to 1,863.
But this year, something interesting began happening. In February, the first new assembly line at Appliance Park in 55 years began making water heaters – a product line that had been previously made in China. A team of employees eliminated parts, reduced material cost by 25%, cut the work hours necessary to assemble the water heater from 10 hours in China to two hours in Louisville. It beat the “China price” price by nearly 20%. Plus, it greatly improved time to market – cutting factory to warehouse time literally from weeks to minutes.
Buoyed by this success, a second assembly line for high-tech refrigerators was launched about a month later. Plans are in the works to open a third building and a third line to produce dishwashers in early 2013. CEO Jeffrey Immelt, commenting in Harvard Business Review, said that outsourcing is “quickly becoming mostly outdated as a business model for GE Appliances.”
Fishman cites Lou Lenzi, head of design for all GE appliances, in the following excerpt:

“What we had wrong was the idea that anybody can screw together a dishwasher,” says Lenzi. “We thought, ‘We’ll do the engineering, we’ll do the marketing, and the manufacturing becomes a black box.’ But there is an inherent understanding that moves out when you move the manufacturing out. And you never get it back.”

It happens slowly. When you first send the toaster or the water heater to an overseas factory, you know how it’s made. You were just making it–yesterday, last month, last quarter. But as products change, as technologies evolve, as years pass, as you change factories to chase lower labor costs, the gap between the people imagining the products and the people making them becomes as wide as the Pacific.

What is only now dawning on the smart American companies, says Lenzi, is that when you outsource the making of the products, “your whole business goes with the outsourcing.” Which raises a troubling but also thrilling prospect: the offshoring rush of the past decade or more–one of the signature economic events of our times–may have been a mistake.

GE is planning to bring about 75% of its $5 billion appliance business back to the U.S. And it is not alone – Fishman cites Whirlpool, Otis, and Wham-O as a few examples of other manufacturers that are bringing operations back from China and Mexico to Ohio, South Carolina, and California. There are other reports of this trend too. In Everything You Need to Know About Insourcing from the White House Blog, Matt Compton says that large manufacturers like Ford and Caterpillar have announced large investments in U.S. facilities – expansions that were previously aimed at facilities in Mexico, China, or Japan. The post names other examples of smaller manufacturers and even service centers that are reinvesting domestically. it also provides these statistics:

  • Business investment is up, growing by 18 percent since the end of 2009
  • We’re exporting more goods and services to the rest of the world. As of October, American exports totaled $2 trillion — an increase of almost 32 percent above the level in 2009
  • Perhaps most importantly, the manufacturing sector is recovering faster than the rest of the economy. Through the course of the past two years, the economy has added 334,000 manufacturing job, and that’s the strongest two-year period of manufacturing growth since the 1990s.

Lisa Harrington also examines this trend in an article in Inbound Logisitics: Is U.S. Manufacturing Coming Back?. She cites further examples of work that was created in or brought back to the U.S. She explores some of the strategic decisions that need to be factored in to where production occurs. The article includes a checklist, Nine Steps to Choosing a Manufacturing Location from Stephen Rogers, author of The Supply Chain Advantage: How to Link Suppliers to Your Organization’s Corporate Strategy.
The article notes that decisions about location must take a total cost perspective. Direct costs were often factored into decisions, while other factors may have been given little consideration. One example:

Labor cost savings are just one factor driving companies to reconsider manufacturing in the United States. To compete more effectively, a growing number of manufacturers are considering shifting operations closer to customers to provide better service, reduce total costs, and enable accelerated growth, according to a survey of 287 manufacturing companies, conducted by market research firm Accenture.

Companies are realizing that the physical location of supply and manufacturing operations can have a significant impact on overall competitiveness. An unbalanced network–where regional supply is physically separated from regional demand–makes it difficult for the organization to deliver on the very customer expectations that drive growth.

Not a return to the days of yore
Fishman notes that such “insourcing” will not suit all companies – basic work processes, such as mass market clothing manufacturers, will likely never return. Relocation in the U.S. seems to suit companies with high-tech and complex manufacturing process and products that require continuous innovation and improvements.
He cautions that American manufacturing will never return to its prior peak, and he describes various ways that things have changed: “Back in the ’60s, Appliance Park was turning out 250,000 appliances a month. The assembly lines there today are turning out almost as many–with at most one-third of the workers.” But he cites the “multiplier effect” that the presence of a large manufacturer can have. We saw the multiplier effect in action when the auto industry was in risk – it wasn’t just the auto jobs that were threatened, but entire communities – including businesses as diverse as parts suppliers to luncheon delis.
Related
Manufacturing May Be Coming Back to the U.S., Long-Term – an article in Forbes by Robert McCutcheon, the U.S. industrial products leader of PwC.
The Reshoring Initiative – founded by Harry Moser in 2010, an industry-led effort to bring manufacturing jobs back to the United States. The initiative works with U.S. manufacturers to help them recognize their profit potential as well as the critical role they play in strengthening the economy by utilizing local sourcing and production.
M.I.T. Forum for Supply Chain Innovation
a community of academics and industry members whose support allows Forum researchers to provide customer-focused solutions to design and manage the new supply chain.
Investing in America: Building an Economy That Lasts – White House report

Workers’ Comp Annual “Must-Read” Doc: The NCCI Issues Report

Thursday, May 3rd, 2012

Workers’ comp geeks and nerds, your wait is over: NCCI’s 2012 Workers’ Compensation Issues Report is out. For the uninitiated, NCCI stands for “National Council on Compensation Insurance, Inc.” NCCI manages the nation’s largest database of workers compensation insurance information, supplying data to more than 900 insurance companies and nearly 40 state governments.See the NCCI state map for a quick glance of states that use NCCI as their licensed rating and statistical organization. NCCI describes the services it offers as “analyzes industry trends, prepares workers compensation insurance rate recommendations, determines the cost of proposed legislation, and provides a variety of services and tools to maintain a healthy workers compensation system.”
So the Annual Issues Report is a rather big deal – arguably one of the most important workers’ comp documents of the year. It offers an annual checkup on the health of market, along with discussion of trends, legislative changes, and the like. Plus, informed commentary on hot topics from various industry leaders.
The cornerstone document in the report is President and CEO Stephen Klingel’s annual update, this year entitled Workers Compensation Market Struggles to Identify a Direction (PDF). Klingel notes that it’s no easy matter offering any forecasts because we are in a time of uncertainties and adjustments as we make the long, slow climb from the recession. A few of his observations we found noteworthy:

  • In what is referred to as “the most surprising and disturbing negative
    development,” claims frequency saw its first increase in 13 years.
  • After 6 years of decline in the residual market (aka, “market of last resort” or “the pool”), NCCI is seeing initial signs of an increase.
  • Direct written premium is showing some growth.
  • State results show deterioration, with the ratio of increases in loss costs to declines doubling in just two years, a trend that is expected to continue in 2012.
  • Key quote: “With investment yields at historic lows, the current levels of underwriting losses are not sustainable. Even with what appears to be a temporary increase in investment gains, the combined ratio needs to decline substantially to earn a reasonable return on capital.”

Goring forward, uncertainties prevail. There are many wild cards that make forecasting difficult, with two big ones being the effect of the economic recovery and the 2012 election. And while there have been both troubling indicators (a rise in frequency, signs of residual market growth) and more positive indicators (improved investment scenario, growth in written premium), it is too soon to say if any of these are the beginnings of a trend.
Here’s an overview of other articles included in the Issues Report – all available for download, and all worth your time.

  • Robert P. Hartwig looks at the labor market recovery and the impact on insurers
  • Harry Shuford talks about the economy and what it will take to get us moving again
  • Peter Burton offers a legislative outlook, in which he recaps some of the major changes in 2011 and looks ahead to 2012
  • Joe Paduda looks at some key issues driving medical costs, opioid overprescribing and physician dispensing
  • Nancy Grover offers an overview of the state of insurance technologies
  • Tanya Restrepo and Harry Shuford write about the aging workforce and its effect on comp
  • Jim Davis and Yair Bar-Chaim examine the first rise in injury claims frequency in more than a decade
  • Dennis Mealy and Karen Ayres discuss the history of ratemaking in workers compensation
  • Charles Tenser examines four of the most discussed legal challenges involving workers comp

WCRI Conference: Shifting Paradigms in Workers Comp

Monday, November 21st, 2011

I spent two very productive days last week at the Workers Comp Research Institute (WCRI) conference in Boston. WCRI plays a unique role in the comp system. Their annual conference, devoid of the usual hucksterism, focuses on the fundamental paradigms of insurance and poses the toughest questions. Some of the answers provided by conference speakers (most of whom are not from WCRI) are both radical and surprising. I find myself relentlessly jotting down notes from topic to topic.
Here are ten paradigm-shifting propositions that I have extracted from my time at the conference. A number of these propositions address the issue of opiate use, perhaps, along with back surgery, the most important cost drivers in the treatment of workplace injuries.
[VERY IMPORTANT DISCLAIMER: These are my interpretations and should not be attributed in any way to WCRI]:
1. Pain is hard to objectify, expensive to treat, and absolutely the wrong focus for treating workplace injuries. Treatment should focus instead on behavioural approaches to pain and the relentless encouraging of maximum feasible physical activity.
2. The comp system, a wonderful success story celebrating its 100th anniversary, is poorly designed to confront the problems in today’s fractured and highly unstable economy.
3. Monopolistic systems for comp (only 4 remain) have unique leverage to solve intractible problems such the cost of drugs in the comp system. Washington state has solved the pharma problem through the aggressive use of generic drugs, the limiting of opiate prescriptions and the imposition of a favorable fee schedule. Alas, these solutions are unlikely to work in states with competitive systems.
4. Most prescriptions for opiates in the comp system are unnecessary, ill-advised and poorly managed. [See below.]
5. Virtually all injured workers prescribed opiates should be evaluated for dependency issues prior to beginning an opiate regimen, drug tested prior to receiving opiates and throughout the course of treatment. Without these pre-conditions, opiate use is full of uncertainty and fraught with danger. (Dr. Janet Pearl has a compelling and well-structured approach to the use of opioids in treatment.)
6. Opiates should come with a written contract and a User’s Manual. Workers should be tested on their knowledge of the benefits and the risks.
7. Most doctors who prescribe opiates have no idea what they are doing, no idea how to manage opiate-based treatment and no clue about the potential for harm. Medical schools simply do not address these issues.
8. Back pain is virtually universal, the inevitable result of aging, and generally is unrelated to workplace trauma. (You might want to read that again for full effect.) To be sure, this is a controversial assertion and involves a complete paradigm shift. Nonetheless, the idea is well worth scrutiny by all parties involved: doctors, payers, injured workers and their families. Conference speaker Dr. James Rainville asserts, among other things, that exercise is the best treatment for back pain.
9. Medical fee schedules lower costs, except when they don’t (e.g.Connecticut, where the schedule appears to be set too high).
10. There is an enormous disconnect between the workers losing their jobs in this recession and the severely limited number of jobs projected for creation over the coming decade. This bodes poorly for the 25 million injured or unemployed workers with obsolete skills who are struggling to return to productive employment.
I recognize that these ideas require much more in the way of detail and documentation. I offer them as a Monday morning stimulant. Consider this posting as a micro-conference on some of the major issues facing the time-worn workers compensation system. I hope it’s a list worth a few moments of your time, as you sip your coffee and prepare for the holiday-shortened week ahead.
Special thanks to Andrew Kenneally, WCRI’s able communications director, for recognizing that bloggers have a role to play in disseminating information about workers comp research and who invited me to attend the conference. I would also acknowledge Dr. Richard Victor, whose penetrating insights animate the entire WCRI world and whose conference-concluding talk (“The Elephant in the Room”) made it well worth the time to stay to the end (see # 10 above).

Recapping 2010 and looking ahead to 2011

Monday, January 3rd, 2011

Here’s a compilation of top news stories in 2010, encompassing workers comp, insurance, risk, general business, and more:

And here are some predictions for the year to come:

NCCI’s View From the Bridge

Monday, May 10th, 2010

At its annual conference in Orlando, the National Commission on Compensation Insurance (NCCI) recently presented an overview of the state of workers compensation insurance across the country . Dennis Mealy, NCCI’s chief actuary, presented to a standing-room only crowd, which is notable in itself, as the normal crowd for an actuary would fit in the proverbial phone booth.
Anyone with an interest in workers comp should take a peak at Mealy’s presentation. As is often the case, viewers will pull out different nuggets, depending upon their points of view. Here’s what jumped out at me:

  • From 2008 to 2009 workers comp premiums dropped by 11.8%. No surprise, as premiums are tied to payrolls and the latter have tanked along with the economy. In addition, average premium rates have declined steadily since 2003, as no politician wants to approve a rate hike.
  • Net written premium from 2007 to 2009 is down 23%.
  • The payroll for manufacturing has been on a steady decline over the past two decades.
  • The payrolls for manufacturing and contracting comprise 20% of comp payroll nationwide, but generate 40% of the premium. Again, no surprise, as the manual rates in these areas are higher then the rates in other occupations.
  • Investment gain – the crucial money made off the float of premium dollars – dropped to 7.1% in 2008, after averaging nearly 15% in prior years.
  • The combined ratio for workers comp is running around 110 – in other words, for every dollar insurers collect in premium, they are spending $1.10.
  • Insurers continue to offer premium discounts in order to secure new business or retain existing business (what my colleague Tom Lynch refers to as “eating their young”).
  • Frequency of injuries continues to trend downward.
  • The average cost of indemnity per lost-time claim and the average medical cost per claim continue to rise.

There you have it: premium dollars are down, investment returns are down, and losses are up. These days it’s not easy making money in workers comp. On the other hand, the economy seems to be recovering; the prospect of virtually universal health coverage could well have a positive impact on comp; and despite all the problems, residual markets remain small.
As is usually the case, insurers are betting that they can beat the odds of a tough market: by writing only the best businesses, by preventing injuries through loss control, by managing claims aggressively and by investing prudently.
There’s Always Tomorrow
What you see from the bridge depends upon what you are looking for: where the despairing see reasons for jumping, the optimist simply enjoys the view. The risk transfer business requires optimism (for everyone, that is, except the actuaries). The great insurance wager never really changes: carriers are betting that premium dollars collected will ultimately exceed what they have to pay out in losses. The negative results of the last few years are viewed as an aberation. Just wait ’til Tomorrow:
The sun’ll come out
Tomorrow
So ya gotta hang on
‘Til tomorrow
Come what may
Tomorrow! Tomorrow!
I love ya Tomorrow!
You’re always
A day
A way!
For insurers, that “tomorrow” hopefully includes more favorable rates, improved return on investment, employers truly committed to safer workplaces, employees who really pay attention, and, while we’re making a wish list, selfless attorneys. You gotta love tomorrow!

Oklahoma: OK!

Monday, September 14th, 2009

The Insider just returned from a speaking engagement in Stillwater, Oklahoma. The occasion was the annual workers comp conference sponsored by the judiciary that manages comp in the state. I was invited by fellow blogger Judge Tom Leonard, whose blog provides valuable information to comp practitioners in the state.
As a relatively high-cost state, Oklahoma is experiencing rumblings in the state legislature to switch to an administrative – as opposed to judicial – system. In theory, this makes sense, as a formal judiciary with its due process rules can slow down the resolution of claims. But this is no simple problem, with no simple solutions. The first event at the conference featured a panel of legislators who were involved in crafting the systemic fix: in general, republicans were pushing for change, while democrats cautioned that the interests of injured workers may be compromised.
While the Insider does not take a formal position on the controversy, we did caution all parties to “beware the law of unintended consequences.” Every “fix” contains the seeds of both success and failure. The prudent legislator would do well to examine the problem from all sides and fashion a dispassionate solution – much as the talented and compassionate judges currently operating the Oklahoma system approach every claim.
Six Humongous Problems
The insider was invited to provide a national perspective on workers comp to the conference’s 400 participants. We focused on six looming crises facing comp across America. Here is a brief summary of our concerns:
1. The Original workers comp model is obsolete: Comp is nearing its 100th anniversary (New York 1911). The workplace at the beginning of the 20th century was very different from what confronts us today. Legislatures struggle to modify the initial legislation to keep pace with change.
2. The economic collapse is a game changer: The comfortable assumptions of financial planners (stocks rise inexorably over time) have disintegrated in the world-wide collapse that began just over a year ago. This collapse has implications for workers comp, with employment shakier than ever and the retirement plans of millions in tatters. Which leads to:
3. The Aging American workforce is going to get older: With baby boomers approaching retirement age, the workforce is already at its oldest. As retirement accounts sink with the economy, more and more workers are finding themselves in a bind. They do not have enough money to retire. These older workers bring skill and experience to the workplace, but their aging bodies are breaking down. The comp system is not built to handle workers in their late 60s and 70s who plan to keep on working. Will comp become the retirement plan of choice for workers with no other choices?
4. Undocumented workers are half in and half out: most states cover the medical costs and indemnity for injured, undocumented workers, but draw the line at vocational rehabilitation. By definition, these folks are not “available for work.” Will Congress create some form of amnesty, thereby opening the door to complete workers comp coverage for foreign workers?
5. Insurers are in big trouble: There may be low hanging fruit in the insurance world, but not in workers comp. There is a nation-wide suppression of rates, which is compounded, of course, by the idiocy of carriers who drop steep discounts on top of inadequate rates. Carriers may dream of a hardening market, but it never seems to arrive. Meanwhile, the bottom line continues to erode.
6. The federal government might mess everything up: The Medicare Secondary Payer program has invaded the settlement process for comp claims, creating chaos and uncertainty and increasing the costs. [Check out Judge Leonard’s blog for some excellent materials on the Secondary Payer program.] Now we have national health insurance on the immediate horizon. No, it’s not “death panels” or alleged coverage for undocumented workers that concern us. It’s the more basic issue of who will choose doctors, under what circumstances, and what impact this might have on workers comp.
We have covered all of these crises in the Insider and will continue to do so in the coming months. I’m not sure that the good folks in Oklahoma found much solace in the fact that their own little comp crisis is dwarfed by issues that transcend state lines. Meanwhile, I did learn a thing or two about Oklahoma. It all comes down to this: Sooners versus Cowboys. No, I’m not going to explain. You have to be there to really understand.