Workers comp results are going to get worse. And medical will drive the decline.

The property and casualty industry will get worse before it gets better, led by the work comp business. That’s one of the key takeaways from a session at AmComp yesterday.
The session featured a panel of CEOs from workers comp insurers asked to tell the audience at the AmComp NY meeting what keeps them up at night. None of them mentioned medical costs, although in a response to a question (from your reporter) they all said it was a big problem.
How are they addressing it? One said they just factor 6-9% of medical trend into their rates, another said it was up to the health insurers and the third said you had to have good claims and medical cost control.
With all due respect, I’d suggest that medical is a very big problem in comp, that very few insurers or TPAs have anything approaching effective medical management programs, and there are any number of programs, tools, processes, vendors, and methods that can have a dramatic impact on medical expense.

Which will impact claIms costs which in turn affects losses and reserves and premiums and profits.
I have no knowledge of these insurers’ managed care/claims programs; t is entirely possible that one – or perhaps even all – of these insurers have strong, outcomes-oriented medical management programs built around small, workers-comp focused physicians, specialty programs for PT, facility, drug, and imaging, and evidence-based clinical guidelines. If they do, they’re well ahead of the market.
As one who started out working in HMO consulting decades ago, the CEOs’ statements were reminiscent of what we heard from executives at big indemnity insurers – medical costs were medical costs, they had cost containment programs. They dominated the health insurance industry back in the mid-eighties.
They are all out of business, with one exception. And that exception – Aetna – is the only one that successfully transformed itself into a health plan company.
Workers comp is becoming has become a medical management business. Some smart insurer will figure this out, and when they do, they will win.
And win big.