It’s Friday…and none too soon

What a %^&*$#$* week!

Like many, I spent far too much time this week dealing with the fallout from the ProPublica/NPR series on workers’ comp.  I really need to devote more time to real work, and less to educating folks after the fact…and cleaning up the mess.

One quick point; in the original Demolition article, the authors state:

in 2013, insurers had their most profitable year in over a decade, bringing in a hefty 18 percent return.

I’m not sure how they are defining “return”; usually it implies profit, but that doesn’t seem possible. I have a query into Michael Grabell, the Demolition article’s author, and will report back if/when I hear more.  According to NCCI, work comp insurers [opens pdf] delivered a 2013 pre-tax operating gain (for private insurers) around 14% while state fund gains were about half that.

Of course, that was a pretty very good year; over the last decade, workers comp writers averaged a 7.1% return on net worth, which is another way to look at “return”. Can’t locate any other data or research that is any where close to the 18% number; will let you know if something turns up.

UPDATE

MIchael Grabell of ProPublica responded to my query this afternoon and indicated the data came from NCCI and AM Best and was also referenced in John Burton’s Workers’ Compensation Resources Research Report.

Without getting too deep in the weeds re combined ratios, whether it’s appropriate or not to include dividends, and other minutiae, I can see why someone might look at those reports and get the impression WC is wildly profitable.

In general, it is inaccurate to say insurers’ return was 18 percent as this figure does NOT represent all insurers.

1. NCCI reports data from the states where they work; this does not include California, New York, New Jersey and eight others. 
2. NCCI and AMBest data is only for private carriers, and does not reflect state funds; these are also insurers and their “returns” were far less than 18%.
3. Data from monopolistic states, where insurance is purchased from the state, is also not included.  Monopolistic states include OH ND WA WY.

More to the point, if you are trying to make the point that insurers are getting fat while workers are getting screwed, it’s helpful to point to a VERY profitable year.

However, if one wants to be objective, looking at one year does not provide an accurate picture of the financial status of any industry; one could just as easily look at 2009, 2010, or 2011 where private carrier results were break even at best.

Kudos to Jill Breard of LWCC and Elessa Young of UPMC – both found far too many typos in my blogs from last week’s WCRI conference.  I won’t tell you how many Jill and Elessa found – that would be mortifying.  Thanks ladies, your diligence is much appreciated!

There’s a great piece by WorkCompCentral’s Greg Jones this am about the IMR process in California; evidently someone inadvertently sent an email – “purportedly from [IMR vendor Maximus] to WorkCompCentral..” that indicates payers have failed to send medical records within 90 days for more than 5000 cases. While the number of cases with missing records has decreased significantly over the last year, there’s no indication any fines or financial penalties have been levied against the responsible entities.

Not sure what is going on here, or why, or who is responsible.

This story will have legs…