Preparing Your Workers’ Compensation Program for 2020
Despite the commercial insurance market growing more difficult this year, workers’ compensation remains a bright spot for buyers, according to panelists on a webcast sponsored by Marsh’s Workers’ Compensation Center of Excellence (COE).
Overall workers’ compensation pricing fell by just over 5% on average in the third quarter of 2019, and more than 70% of employers renewed flat or with rate decreases, according to Marsh data. James Sallada, Northeast placement leader for the risk management segment within Marsh’s US Casualty Practice, noted that many insurers now want to write workers’ compensation to balance out declining profitability in auto and general liability, a reversal from just a few years ago, when insurers often shied away from the line.
Still, despite workers’ compensation remaining relatively competitive—especially when compared to other primary casualty lines—there is growing concern about interest rates and reserve inadequacy for liability lines potentially affecting workers’ compensation.
Employers would do well to differentiate their risk for underwriters by highlighting their safety culture. With insurers being more vigilant in the underwriting process, employers should be prepared to provide more information about payroll, loss history, and employee concentrations. Moreover, they should work with their brokers to set clear renewal strategies and start the process early.
Panelists on Marsh’s webcast explored a number of trends that are expected to affect workers’ compensation and workplace safety programs in 2020:
- Marijuana legalization remains an important and complicated topic for employers, especially considering the divide between state and federal laws as well as inconsistent court rulings on workers’ compensation benefits for employees that test positive for marijuana. There remain arguments both in favor and against of using marijuana as a form of treatment in workers’ compensation.
- The Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) expires at the end of 2020 and unless there is a quick decision about its fate, many employers are expected to start facing policy price increases and doubt about their renewals. Employers with large concentrations of employees could be among the worst affected.
- Telemedicine is gaining interest among employers due to its ability to provide effective care to injured employees in a timely fashion, which could be the difference between a good or bad claim outcome. Dennis Tierney, Marsh’s national director of workers’ compensation claims, said while telemedicine is mainly used during the triage process today, it could facilitate ongoing doctor visits and physical therapy and rehabilitation in the future.
- California’s Assembly Bill 5, set to take effect on January 1, changes the criteria used to classify a worker as an employee or an independent contractor. Because AB5 is expected to make it more difficult for employers to classify workers as independent contractors, it may lead to increased costs that employers may not be able to absorb.
The panelists also addressed the growing use of technologies in workers’ compensation programs as well as a number of legislative updates that are expected to affect workers’ compensation.