Workers' Compensation Webcast: Looking Ahead to 2019
Conditions in the workers’ compensation insurance market were favorable in the third quarter of 2018 and are expected to continue through the rest of the year and into 2019, according to panelists on a webcast sponsored by Marsh’s Workers’ Compensation Center of Excellence (COE).
Overall workers’ compensation pricing fell by close to 5%, slightly less than the 6.1% average drop in the previous quarter, according to Marsh data. More than half of all buyers renewed with rate decreases while 26% saw increases in their rates. This favorable pricing is driven in part by positive developments over the last several years, including declines in average loss rates and lost-time claim frequency, a slowing of the pace of claim severity increases, and a combined ratio that has reached its lowest level in a half-century.
Mature carriers are driving a buyers’ market for “favorable” risks as they try to hold onto incumbent business while competing with each other and new entrants for new business, said Christine Williams, a managing director in Marsh’s Workers’ Compensation Center of Excellence. While not all favorable risks are seeing reductions, they are generally renewing at rates below what was seen in the last few years.
Panelists also discussed key trends that could affect workers’ compensation and workplace safety programs, including marijuana. Even as individual states continue to legalize marijuana for both medicine and recreational purposes, no states allow workers to use the drug while on the clock, and employers are concerned both about its federal legal status and the cognitive and physical effects it could have on employees.
Yet, this remains a thorny issue for much of the country, particularly in workers’ compensation. Connecticut, Maine, Minnesota, New Jersey, and New Mexico allow medical marijuana to be used as treatment under workers’ compensation. At times, courts have also had to decide on individual cases of treatment reimbursement. And not all of those rulings have been consistent, said Elizabeth Clark, a senior vice president in the Marsh Claim Practice.
Despite the concerns about legality and compensability, marijuana can offer a number of benefits, including providing an alternative for treating chronic pain that has fewer long-term side effects than opioids. Opioids are, in fact, a recognized problem in the country and almost all states are taking some form of action to limit, or at least control, them in workers’ compensation.
Finally, Laurence Pearlman, a senior vice president in Marsh Risk Consulting’s Workforce Strategies Practice, discussed a recent MRC survey which found that while companies are doing a decent job in addressing safety basics in the workplace, not enough is being done to tackle emerging risks. The survey found that:
- Only 5% of companies use ergonomics or wearables in their corporate employee health and safety strategies, even though these devices can provide critical data to identify problems.
- 6% of business leaders said they are addressing robotic use and only 9% looking at how humans interact with robots.
- 9% of respondents said they include workplace violence prevention and management in their employee health and safety strategies.
Temporary workers and changing workplace demographics are also not being given a lot of importance by the majority of employers.