Yesterday’s news that US industrial production continued to improve was a welcome sign of good news for a work comp industry that has been hammered by declining claims frequency, increased severity, horrible investment returns, and a recession that prolonged what was already one of the longer soft markets in memory.
Notably, manufacturing, long a weakening sector, has shown solid strength of late, particularly in New York, where new orders were up substantially over February’s figures. Employment in the sector was also up significantly to its highest point in two years.
As NCCI has reported, injury rates tend to spike up during an economic recovery as the pace of work speeds up, full-time workers get more hours and overtime, and new, less-experienced workers are hired.
What to watch for
The New York Fed typically is among the quickest of the 12 Federal Reserve Districts to report economic data; other Districts will be reporting over the next few days. As New York, along with the rest of the mid-Atlantic and northeastern states were hard hit by winter storms, economic activity may well have been suppressed by factory closings.
The other Districts may well report sharper increases, and if they do that’s good news for the comp business.
What does this mean for you?
Injury rates are going to increase, as is the raw number of injuries. While bad news for the affected parties, this will be positive for occ health clinics, case management and bill review companies, pharmacy benefit managers, TPAs, and other servicing entities.
Insurers will find this a mixed bag, as an increase in injuries means higher claims costs. However, better investment returns, and what appears to be a ‘de-softening’ of the comp insurance market is as welcome as it is overdue.
Mar
16
