Last week the first five predictions about what happens in workers’ comp this year went up…today’s the second five.
6. With one or two exceptions, don’t expect much in the way of private equity investments.
There may be one or two large transactions, and a couple small ones, but outside of that, the bloom on the workers’ comp rose appears to be fading.
7. OneCall will be sold and/or split up.
The BlackRock and KKR entities that are the current owners are not operators; they are debt owners. CEO Tom Warsop has squeezed out all the squeezable costs – and then some. Growth – defined as new business from new customers – is not happening. Add the overall drag on work comp services from the still-real drop-off in claims and claims services, and the reasons to hold on and hope are few indeed.
Plus, if interest rates increase – which is a distinct possibility – and if private equity interest in workers’ comp continues to diminish from it’s current modest level – also a distinct possibility – OCCM’s owners may well decide to sell soon rather than watch values decline.
8. COVID’s impact on costs and rates will prove to be minimal.
COVID claims are cheap, few are anywhere close to catastrophic cost levels, the effect of presumption laws and regulations is not much of an effect at all, and many employers – especially health systems – are forcing employees to use PTO rather than file for WC when they test positive/have symptoms.
Most research organizations and actuaries would do well to reflect how their early predictions were so…bad.
Helpful hint – two places to start; a) the tendency for WC “experts” to catastrophize and b) the almost-complete lack of understanding of healthcare drivers, costs, cost structures, reimbursement, and epidemiology.
9. There will be no big issues in workers’ comp. “Big” defined as important, needle-moving, disruptive, revolutionary.
No, medical marijuana is NOT a big issue – neither is COVID, or presumption, or the mid-term elections (there is ZERO interest in workers’ comp on the federal level) or remote work (does anyone seriously believe office workers tripping over toys will amount to any real dollars?)
Oh, and with rates at all time lows, frequency continuing to drop, and medical costs (with the exception of physical therapy and facilities) flat, coupled with ongoing supply chain and labor market issues, execs at big employers are (justifiably) completely uninterested in workers’ comp.
If the big girls and boys don’t see any issues, there aren’t any.
10. Here’s the kicker – the biggest long-term concern for workers’ comp is global warming...yet this is getting zero attention.
There’s going to be an inevitable increase in issues related to heat, flooding, fires, drought, tornados and hurricanes. This is getting more real every day yet remains all-but-ignored by pundits, policy-makers and rate-makers. We can expect more heat-related claims. Hurricanes, fires, and tornados will increase in number and severity; affecting logistics, labor, construction, and claims. The research is clear.
What does this mean for you?
As always, success favors the insightful, and failure plagues the ignorant.
Regarding #9, with senior management just trying to get and keep employees with higher wages and sign on bonuses, I doubt they’ll have much interest in minor case cost containments activities like surveillance, UR etc. They will be more concerned about their employees’ experience with the case handler and the process, not as much with the financial result.
Hello Steven – good point – it is possible enlightened execs will look to workers’ comp payers/risk managers to be part of the solution to labor shortages. Namely, prevent injuries and drastically step up return to work.
I’ll bookmark your prediction and hopefully remember it this time next year.
be well Je
Number 10 is a very astute observation, Joe.. This has been on the radar of the property market for years but workers’ comp professionals being the traditionally slow adopters we are, haven’t given it much attention, particularly with our focus on COVID for much of the last two years. Kudos to you for identifying this looming concern.
Thanks Jeff – strikes me as pretty obvious, and I continue to be surprised that underwriters/actuaries and execs don’t discuss/address this more.
Be well, Joe
Joe, how about the threat to the “Grand Bargain” of WC? It seems to me with the potential litigation against employers for COVID infections allegedly occurring at the workplace, and being taken home to loved-ones, might this cause for further erosion of exclusive remedy?
Hello Dave and thanks for the note.
Good question. If I’m understanding this correctly, there are two separate issues here – one is did the infection arise out of or in the course of employment (recognizing some states have different standards for illness vs injury).
The other is a liability issue, and isn’t workers’ comp related.
Focusing on the first, I just don’t see this as an issue, for several reasons. COVID has been around now for 2 years, and this type of litigation hasn’t had much of an impact, if any at all. Second, COVID claims are cheap, so a) few attorneys are going to take them on as there isn’t a lot of lucre on the table and b) plaintiffs aren’t likely to see a pot of gold at the end of the litigation rainbow.
Be well – Joe
Joe, very thoughtful predictions. Thinking about the observations you and Steven Jones made regarding #9 I’ll add that higher wages is just one way to be competitive. Another way to become an employer of choice is to offer health care benefits if you as an employer can afford / choose to differentiate yourself that way. In my experience, those employers who offer group health benefits in industries where not everyone does correlates with better UW risks and lower X-mod. Wishing you, your readers, and our nation health and success in this new year, Marc
Thanks for the note Marc – appreciate your kind words.
I join you in encouraging employers to offer health benefits; remember those low prices everyday at Walmart are partially subsidized by taxpayers; tens of thousands of Walmart employees are on Medicaid. So, do the right thing and the smart thing at the same time!
be well Joe