3 Trends That Impact the Price of Your Work Comp Insurance

This will be an uncertain one for Workers’ Compensation rates as some programs will see some prices flat and others dropping, according to a market prediction from USI. Plus, medical cost inflation will continue; it’s expected to rise 6 percent year over year, according to Insurance Journal.

What that means is “uncertainty” will continue from last year, so businesses will continue to be uncomfortable. What is causing this? There are, as I see them three trends:

Trend #1: Work Comp Costs Will Decrease

This is nothing new. Workers’ Compensation rates have been steadily dropping for some time now as claims frequency declines and workplace safety continues to improve. Last year, Work Comp rates dropped in most states, some by double digits.

Because Workers’ Compensation is regulated at the state level, changes tend to happen piecemeal, as individual states pass new laws and institute new policies. In the last 25 years, though, the general trend in Workers’ Compensation Insurance costs has been downward. Here’s what that means for small-business owners:

• For the moment, Workers’ Comp costs are lower in most of the country than they’ve been in two and a half decades, but that will NOT and cannot continue.
• In Florida, a judge recently ruled that Workers’ Comp benefits had dropped to such an extent that they are no longer a fair exchange for workers’ waiving of their right to sue over injuries. While this decision is in appeals, if it stands, it could mean that employers are once again open to lawsuits over employee injuries.

Trend #2: Medical Costs Will Increase

We know that medical costs will continue to rise by at least 6 percent this year, a pricing trend caused by a number of factors, including the on-going political problems with the ACA. What needs to be done?

According to Peter Burton, senior division executive for state relations at the National Council on Compensation Insurance (NCCI), medical now represents on average 60% of the benefit dollar provided to injured workers nationally. Duration of treatment may be a major cause of rising medical costs. America’s workforce is composed of an aging population. When an aging worker experiences an injury, their recuperation is longer. This scenario, which is being repeated more and more, requires additional medical treatment, and that impacts the medical costs of your Work Comp claim.

We must recognize that carriers cannot continue to “give away” policies. Based on analytics, carriers are experiencing record losses, but continue to give maximum credits. It’s not a risky prediction to say that this situation will not last.

Trend #3: Business Owners Will React

This year will see more business owners institute initiatives to enhance safety programs already in place. Owners will recognize valid, alternative ways of business management that can reduce Work Comp claims and duration of treatment. Also, it’s possible that 2019 may bring structural changes in the ACA that affect overall medical costs.

Those are the three trends. These are the three questions I’m asking every business owner:

• What processes are being put in place to prevent premium increases?
• What are you implementing NOW to maximize savings – which will enable you to be more competitive in your industry?
• What financial mechanism fits best for our business model? Have you reviewed all your options?

I advise you to jump ahead of higher costs – and leap ahead of your competition. These days, California businesses need assistance navigating through the challenges of the Work Comp world. I can advise you to make sure you are protected and prepared to deal with any situation. Call to begin our conversation today.