TV

Paul Lucas  07:16:44  
Hello, everyone and welcome to another edition of insurance business TV as we introduce our final new power panel of 2024. Yes, you've already met our panels for property construction, environmental, cyber and professional risks. And now it's time for workers compensation to get its moments in the spotlight. We have a brand-new editorial panel who will be meeting quarterly to discuss the trends in the space and how the market is developing. So, let's meet them shall we? We have Jeff Sandy, Executive Vice President of workers compensation at Jencap. Deborah Fox, Vice President workers compensation at NFP property and casualty services. Jeff Eddinger, senior division executive of the National Council on compensation insurance, software, everyone and to get us started give us an overview of the worker's comp landscape as we stand now several months of course into 2024. How does it compare to last year any changes or trends developing? Jeff II? I'm going to start with you.

Jeff Eddinger  07:18:36  
Yes, thank you, and I think it's probably good just to remind everyone how we started off the year the last calendar year combined ratio that we saw for workers compensation was 84%, the second lowest combined ratio in recent history, marking the sixth consecutive year of under 90% for the workers compensation industry. So, we wrapped up the year we're NCCI files, mainly last cost decreases. We saw improvements in claim frequency workplace safety, and generally looked at at flat muted indemnity and severity trends. So that's kind of how the year wrapped up.

Paul Lucas  07:19:18  
All right, so nice. Overview to start off with from Jeff E. I'll switch it over to Jeff S because of course, you're in the whole space wholesale space. Excuse me. So how you see it seeing things, Jeff? 

Jeff Sandy  07:19:29  
I think you know, 24 versus 23. thus far has been very similar status quo. You know, there's still some, some rate reductions that are impacting, you know, some of the renewals. Some of the combined ratios we think are creeping up a little bit here and there. We're hearing from some of our carrier partners, so they're not getting rate increases, but they're monitoring you know, accounts that deserve maybe a slight rate increase there. So overall status quo. We were in the audit space, we're seeing carriers focus on audits and making sure the division of payroll is accurate and making sure that those the payrolls are captured and they're collecting the appropriate amount of premium and is driven by the again, the rate reductions over the last several years. But yes, essentially status quo compared to 23.

Paul Lucas  07:20:21  
Okay, so it takes a status quo, perhaps with a, an odd rate increase here and there, Deborah, of course, you're predominantly on the declaim side. Is that how you're seeing things as well?

Deborah Fox  07:20:31  
From the plaintiff side, we're still dragging a couple issues into 2024 that we thought were behind us. The first one is the rise of AI use in dealing with the ongoing adjuster shortage. AI is being used for anything from predictive modelling, you know, anticipating closures litigation, and then also what's fascinating is also for the, like, summarizing documents for adjusters to try to take some of the tasks off their, their plate, which is quite fascinating. And then the other topic is one of the rating bureaus called the WC IRB, which is the rating Bureau for California. They are making some proposed amendments to clarify their COVID-19 protocol. So from December, one of 2019 through August 31 of 2020. For those COVID-19 claims are to be coded as a catastrophe code 12. And only claims in that same time period are to be excluded from the experience rating and addition. they're proposing six additional class codes for the food and beverage industry. And this is to align the employer costs with their exposure.

Paul Lucas  07:22:07  
Well, of course, that's a sort of a general overview of the workers costs base but if we can dive into some of the specific trends, one factor of course is marijuana legalization. Obviously, this will have different impacts state by state, but I'd love to find out how each of you are dealing with its complexities and what impact it is having on on your insurance or on your clients. Deborah, I'll stick with you.

Deborah Fox 07:22:32  
Sure, well insurance that already have a drug free workplace policy in place are better equipped to deal with this issue. They if they have their employee sign an acknowledgement of this policy then in some states but not all, because as we know workers comp it varies by state to state but in some states, you can use that drug free policy as a defence to mitigate your loss.

Paul Lucas  07:23:05  
All right, Jeff s I believe that you have some specialists in the space who are particularly looking to help with this issue. Am I right? Yeah,

Jeff Sandy  07:23:14  
We recognize that it's not every day work comp necessarily in the in the cannabis space. So, we've, we've sent some people for training different recognizing different exposures and finding those different specialty markets to do that, for all lines on even just the workers compensation, but, but yeah, it's created an opportunity for us, honestly, in the wholesale space that there's a specialist need there, because it is a little bit different. So we've been able to leverage some of that as opportunities.

Paul Lucas  07:23:47  
Right? So JFS is seeing opportunities and Jeffy is this something that you're tracking?

Jeff Eddinger  07:23:52  
Absolutely. NCCI tracks, marijuana issues across the states, both where it's been approved as for medical use, or even recreational use because of the issues that can cause with, as Deborah mentioned, compensable ality of claims, or even the coverage of can marijuana be a covered drug to treat workers compensation injuries? Will the existence of marijuana will it help replace opioids in some cases, as a treatment for pain? So this is something that we track and is available on our website with all these issues laid out for all to access?

Paul Lucas  07:24:39  
I mentioned there'll be a few people heading there now. But let's look at another trend if we can, which of course has been the spike in remote and hybrid work, but particularly on the back of the COVID 19 pandemic of course, although even though that seems to be largely behind us, a lot of us are sticking with that plan. So is there anything you think employers are typically overlooking by allowing the employees to work in this way, Jeff S What do you think?

Jeff Sandy  07:25:05  
I mean, I it's a different animal surely. The question of 24-hour coverage comes up in my mind is you know, when is the injured worker, hurt? You know, are they living their own child? Are they running to the store to get ink cartridges and is that is that a covered exposure now, if their job duties require them to have to do that to print those items, and so, there's some of that we haven't seen a big impact on it necessarily, but it is in the back of your mind is has an exposure.

Paul Lucas  07:25:44  
Okay, so it's in the back of your ex's mind, is it in the front of yours? Jeffie What do you think?

Jeff Eddinger  07:25:51  
Yeah, I would say, and I would echo that when the entire workforce went remote. There were a lot of concerns about what it would mean for workers compensation, a lot of scenarios about tripping over forwards or pets or things like that, but I would just say as a rating organization, which can collect all the data on an overall basis NCCI has not really seen a significant impact to the shift to more hybrid work. Now of course, there can be individual variations for certain jobs or job classes, but on an overall basis. We have not seen a significant impact of this shift.

Paul Lucas  07:26:31  
Sure, those words will be to the relief of many Deborah I'll bring you in as well because we were actually just chatting prior to this recording and you were mentioned as being there's been a study on this topic is that right?

Deborah Fox  07:26:43  
Yes, sir. Has the WC IRB rating Bureau has done a preliminary study comparing the class codes for in office clerical staff with the telecommuter class code for clerical and they found that there is a three times greater claim frequency with the clerical roles that are in office versus the clerical telecommuters, and it's too soon to know why, but um, you know, we can propose that it's possible that the employees are enjoying this flexible work. Schedule, and therefore, they're more reluctant to file a claim. It could be that the burden to prove that the incident was related to a work task is a little bit harder. And then it could just be the telecommuters, or hybrid workers just aren't reporting claims so I'll in the future can tell where we go with the trend on this. But um, you know, key thing to note is your ergonomics are just as important regardless of where your employees working.

Paul Lucas  07:27:58  
Yeah, count me among those enjoying those flexible work arrangements. I want to sort of wrap up the conversation if I can, just by asking you for some general tips for our retail broker audience out there who are navigating this space and its complexities this year. Perhaps you have some thoughts and guidance for them. Jeff s. Any thoughts from you? Yeah,

Jeff Sandy  07:28:21  
I mean, you know, I think the need to continue to monitor financial of your your carrier partners is key. We've seen a few blips here and there on some downgrades but some negative outlooks and I think you know, those need to be monitored closely. Especially as you grow the carrier partner and expand that premium volume with them. You want to keep an eye on, on what's going on there to make sure that they're the strongest that you need them to be. That along with just align yourself with a with an expert. You know that with cannabis and the capacity coming to the marketplace, it's hard to keep track of all of that. And if you align yourself with a workers compensation specialist, you're more apt to understand what's out there, what the new markets are, maybe again, what the financial issues are, and I think that's a good way to prepare for the future.

Paul Lucas  07:29:17  
I imagine if they are going to reach out to a specialist you might know who they should call Jeff, but I will. I will flip it across to Deborah now any tips from you Yeah,

Deborah Fox  07:29:28  
Cell phone carriers do offer free safety and loss prevention resources on their website. If these are utilized, it can help lower the experience mod for clients.

Paul Lucas  07:29:43  
There and Jeff, any final thoughts on the market from you as we as we look ahead?

Jeff Eddinger  07:29:50  
Well, I would say that the future of the workers compensation system looks strong, and I think is in a good place to serve both employers and injured workers. Inflation the impact on inflation work on workers compensation has not been a negative, as we've seen in other lines of insurance. And I say that because payroll is our exposure base. So, when costs go up, payrolls go up, premiums automatically respond, and we have not seen inflation necessarily adversely impact the medical or indemnity benefits that are paid out because they are by statute. So I think the market is in a good place results are good. Residual markets are small, which means that carriers are willing to write this business voluntarily. We're places continue to become safer, and the frequency of claims continues to drop. So, I am optimistic for the future of this workers compensation system.

Paul Lucas  07:30:54  
I'll be like a bit of positivity to wrap things up. And we're optimistic for the future because of course, this panel will be meeting again indeed every quarter. So if you want to find out about the latest trends in the Workers Compensation space, well, you know where to look. In the meantime, for the latest workers comp news, make sure you visit the dedicated specialty section of insurance business America and we'll see you next time right here on the show. Thank you for joining us on the episode of Insurance Business TV.