Starting today, Insightful Accountant is bringing you a new feature, Workers’ Compensation Wednesdays in cooperation with QuickBooks Payroll Workers' Compensation. From time-to-time we will strive to inform you up-to-date facts about the workers’ compensation industry as well as timely information impacting your business in the area of ‘work comp.’
For more information on this topic, make sure to register for Insightful Accountant's webinar with Intuit Workers' Comp on March 4, 2020 at 3:00 p.m. Eastern Time, presented by Lynda Artesani and Matthew Fulton. Click here to learn more and register for 6,500 Reasons to Review Your Workers' Comp Policy.
In case you didn’t know it, once upon a time, our own “Murph” served as a Risk Manager for more than 10 years with responsibilities for self-insured workers’ compensation including self-administration of a multi-million-dollar workers’ compensation fund; and a managed health care program for injured workers, so he has a ‘hands-on knowledge’ of this topic.
Rate-adequcy
Recently, the National Center on Compensation Insurance released their 2020 Focus on 5 Survey which asks workers’ compensation insurance executives what they considered the top five issues impacting workers’ compensation would be for the year. As it turns out, the number one concern deals with the ‘rate adequacy,’ considering lower premiums producing slower growth, and the impact of increased business competition. Many leaders have chosen to expand the resources they allocate to actuarial analytics to address issues of rating adequacy. While this is an issue that many of our readers will feel doesn’t really ‘impact them,’ I would beg to differ. You should realize that what they are talking about can be summarized in layman’s terms as, “should we be charging the same thing, less or more even though the loss trend in claims has been declining over the past few years… simply because it might change at some point in the future, contrary to those trends?” And that has the potential for impacting you, and your workers’ compensation costs significantly. So keeping track of what the industry is thinking and doing does in fact potentially help you as a small business to know when you might need to look for coverage alternatives.
Aging-workforce
Another area of concern rests with the ‘aging workforce’ and how that will potentially impact workers’ compensation claims. While older employees tend to work more safely, when an on-the-job injury does occur, the claims arising from it tend to be more significant than for younger employees suffering similar injuries. Because the historical trends of retirement have impacted the statistical models of accident frequency and severity, the adequacy of true predictors are limited and ‘only time will tell’ about the long-term effects of this change in the workforce. If you have older employees who have chosen to stick around and are still working for you as W-2 employees, you might want to read about the trend in shifting them to 1099 Gig worker status as recently reported in our article titled, ADP Research Institute® Report Reveals the Gig Workforce is Filling a Void in the Tight Labor Market.
Medical-costs
As with most insurance that has anything to do with ‘medical costs,’ the future expense and deliver methodology of health care as it relates to workers’ compensation was the 3rd most significant concern expressed within the survey. While new medical technologies ranging from medications to treatments and medical equipment all enhance the care delivered, they all tend to drive up the cost of that care, at least initially. Enhanced managed care arrangements including provider partnering maybe one method for controlling such future costs as they related to workers’ compensation coverage.
Source: ADP Research Institute report, Illuminating the Shadow Workforce: Insights into the Gig Workforce in Businesses (used with permission).
ADP_Gig_Fig-1_Chart-2
The fourth area of interest deals with ‘the future status of Gig workers.’ While huge numbers of individuals have chosen to take advantage of the gig economy and essentially are working in a self-employed role, many states are now passing legislation (or considering the passage of legislation) that in effect removes their ‘self-employed’ status and makes them employees of the company for whom they were providing service on a contract basis. In doing so, they immediately fall under the protections of statutory provisions like ‘minimum wage’ and ‘workers compensation’. This issue is how such sudden shifts will impact the ability to properly evaluate the risk and thus rate adequacy of such workers. You can learn more about the status of the Gig Workforce upon American businesses in the Insightful Accountant ADP article I already mentioned.
Workplace-wearable-robotics
‘Technological change’ is the fifth area of concern. How will technology impact workers in the workplace, no matter where the workplace is at? For example, if workers are responsible for driving from one location to another, what additional risks are imposed from encounters with autonomous vehicles. Another technology that is changing the workplace is worker enhancement via ‘wearable devices,' that can substantially improve performance. However, the question is, can they actually contribute to over performance that leads to on-the-job injuries (like repetitive motion issues)? These big changes can mean substantial economic gains for businesses, they can also mean the potential for new sources of previously unknown injury mechanisms. Both the safety and risk impacts from these tech changes are just now beginning to be studied, as well as the 'modeling' by which workers' compensation insurance premiums related to such factors will be assessed.
If you would like more information about the survey, then head on over to the NCCI, Focus on 5 Top of Mind in 2020 for Work Comp Executives, published on January 7, 2020 by NCCI Insights1.
Now you might say, “Murph, this survey is more than a month old… does it still apply?” Well sure it does, because just yesterday (2/11/2020) I read that Risk & Insurance®2 canvased attendees of the National Workers’ Compensation and Disability Conference© & Expo3 to get their thoughts on challenges that faced them during 2020; and while that survey identified 10 challenges, the same five were included, and essentially expanded on by those Work Comp Administrators and Risk Managers attending that conference.
And, if you would like to ‘Be prepared with workers’ comp with pay-as-you go every time you run your QuickBooks Payroll’, then head on over to the QuickBooks Workers’ Compensation website. The QuickBooks Workers’ Compensation offering is provided by Intuit Insurance Services Inc. and AP Intego.
For more information on this topic, make sure to register for Insightful Accountant's webinar with Intuit Workers' Comp on March 4, 2020 at 3:00 p.m. Eastern Time, presented by Lynda Artesani and Matthew Fulton. Click here to learn more and register for 6,500 Reasons to Review Your Workers' Comp Policy.
Footnotes & Disclosures:
Footnotes:
1 - NCCI Insights is a publication of the National Council on Compensation Insurance (NCCI.com) of Boca Raton, FL.
2 - Risk & Insurance® is a publication of LRP Publications - Horsham, PA.
3 - The National Workers’ Compensation and Disability Conference© & Expo is a conference production of Risk & Insurance®, a publication of LRP Publications - Horsham, PA.
Disclosures:
While this article is not paid advertising, and the author has not been compensated directly for the development of sponsored content, the URLs provided within this article are associated with paid promotions or other advertising displayed on this website.