By Peter Rousmaniere
The $85 billion workers’ compensation industry is shrinking. Big data is penetrating everywhere. Injury risk is fading into a broadening array of employee absence risks.
Considering these trends, are you ready to adapt and change?
I devoted much of 2014 to exploring trends that are disrupting one aspect or another in workers’ compensation. Four changes appeared to demand attention. They are:
- (1) the decline in the frequency and number of work injuries and claims;
- (2) the present and future role of advanced technology in work safety;
- (3) the often under-estimated impact of Big Data, particularly in claims; and
- (4) the unrelenting rise of leave, disability and other employee rights through federal, state and local legislation and enforcement.
These four changes may appear independent of one another. But the workers’ comp professional benefits by looking at them together. And chief executive officers simply must view them as an organic whole, to make sense of competitive strategy for the years ahead.
WorkCompCentral has released on its website: “Seismic Shifts: An Essential Guide for Practitioners and CEOs in Workers’ Comp” (PDF)
The report draws extensively on private and government data and interviews to persuade the reader to take advantage of industry shifts. Publication will be followed by webinars.
Consider the trends in injuries with durations of at least 31 days. These injuries account for probably some 90% of claims costs and close to all the serious medical, legal and claims adjusting challenges. In 1993, there were about 450,000 such work injuries. This year, there will be about 250,000. In 2022, there will be about 175,000 – or even fewer, if work safety and injury response improve at a faster pace than in the past.
Think for a moment: over, 30 years, the archetypical workers’ comp case declines in numbers by 275,000 even while the American workforce increases by 38 million workers. That’s a 75% decline in incidence rates for serious injuries.
What is causing this decline? There is no authoritative study. A little analysis of the manufacturing sector suggests that 33% of the reduction in serious injuries in that sector was due to lower employment, while a very large 67% was due to worksite factors. These include work redesign, training and enforcement of safety, and faster and more expert injury response with an early return to work.
A 2013 study by University of Oxford researchers can arguably be used to project a 60% incline in work injuries in the future, due to 21st Century information technology.
This spells business opportunity to many workers’ comp professionals and businesses, for the impact technology is spectacularly complicated. For instance, a 2014 study of “telematics” in trucking found a sharp decline in accidents, but also found that constant electronic monitoring increased levels of stress in drivers and short-term illness. And, surreptitious observation of taxi drivers in Munich, Germany, revealed that cab drivers there who knew their cars had anti-lock brakes drove more recklessly.
Information technology investment in claims management is poses what appears to be at first glance a contradiction. Some claims functions are being entirely removed from humans; yet elite claims professionals are being asked to be more analytical and collaborative. Predictive systems are allowing the better-qualified claims adjusters to tackle complicated claims with more skill.
An example of vendor innovation to match the lighting up of claims management is Bunchcare’s introduction of specialized medical case managers. The firm has introduced to its clients case managers with enhanced competencies in surgery and in pharmacy (which included opioid management). More professional expertise and more team collaboration are the hallmark of lit up claims management.
Automation in work safety and claims are, rather than reducing mental demands on workers’ comp professionals, creating premium jobs for the adept. These opportunities are likely as not to be seized by individuals (managed care people, worksite personnel, for instance) who do not necessarily hold formal IT, safety or even claims credentials. Close inspection of innovation in workers’ comp in the past reveals that an appetite for innovation, fusing new ideas with personal doggedness, is the key to career success.
Most employers today have issues with managing employee leaves, disabilities and other employee benefits and rights, all of which combined make their workers’ comp agenda relatively smaller. Mandated leaves, promulgated at federal, state and local governments, have roughly quintupled in number in the past fifteen year.
Some market players, such as Pinnacol Assurance (the Colorado state fund), A.I.M. Mutual (a New England monoline carrier), Broadspire, Sedgwick and York, understand this. They have invested in a variety of initiatives, including non-occ claims management, worksite wellness, and linked health insurance. Combined, all of these initiatives can be said to be in the Absence Business.
In sum, the demographics of work injury and technology advances are creating disruptions and bright opportunities for those in the workers’ comp industry.
Click here to download the free report: “Seismic Shifts: An Essential Guide for Practitioners and CEOs in Workers’ Comp” (PDF)
About Peter Rousmaniere
Peter Rousmaniere is a journalist and consultant in the field of risk, with a special focus on work injuries. Peter is an award-winning author of some 200 articles on many aspects of workers compensation. He is a columnist for WorkCompCentral. Holding an MBA from Harvard Business School, Peter has been in the workers’ compensation field for 25 years. He resides in Woodstock, VT, a picturesque New England village. Email: email@example.com.