“If we didn’t come up with the idea, it isn’t worth considering.”

“That can’t be a good idea, we didn’t think of it.”

“Why would we listen to anyone from outside our company; we’re the biggest/best/most experienced/industry leader.”

Those are just three of the statements I’ve heard from large work comp insurers over the last two decades – all  from insurers who’ve fallen far from their glory days of market dominance. They may seem ignorant, or dumb, or even kind of funny – but they were real.

Sitting comfortably in leather chairs behind their nice desks, the men who made these statements were completely secure in their belief that their company, their way of doing things, their mindset and culture were completely infallible.

How wrong they were. As easy as it is for us to see that now is how impossible it was for them to see reality then. 

The next five years are going to bring profound changes to workers’ compensation, changes which – by definition – will make many of today’s business practices obsolete. It isn’t hyperbole to say that unless you completely revamp the processes, systems, technology applications, and metrics you use today, you’re toast tomorrow.

We are seeing that with Liberty’s progressive de-emphasis of workers’ comp. With the increasing outsourcing of claims functions to TPAs. With the rapid growth of what were relatively small players just a few years ago.

And that’s just the beginning.

All these changes have been driven by lower work comp claims frequency – that’s not new news to anyone. But hidden behind this is another major driver – the continued inability of major insurers to understand the business they are in.

Work comp insurers are in the business of managing medical and disability. While many think that’s what they are doing, they aren’t. Their claims management approach, predicated on the disproven model of huge provider networks delivering discounted care and the medical model of disability, overseen by overworked and under-resourced claims adjusters reporting to executives steeped in claims who don’t understand medical issues at all, only seems to work as long as premiums stay high and frequency continues to decline.

Wrenching changes are coming to employment, job availability, workplace demographics, trade and safety nets, changes that the industry is completely unprepared for.

Not to worry; the powers-that-be will schedule meetings, draft memos, write white papers, and do re-org planning, most of which will be completely ineffective, except insofar as it makes the execs feel like they are doing something. They’ll get rid of managed care departments, expertise, programs because “those programs haven’t worked.”

Of course they haven’t, because they were either the wrong programs to start with (percentage of savings network models) or the execs didn’t force adoption of intelligent medical management on a recalcitrant claims culture.

I see this happening all around the industry, and it’s like watching Antarctica melt. By the time these worthies figure out it’s real, they’ll be floating towards the tropics on a rapidly-melting iceberg.

With no landfall in sight.

NCCI CEO Bill Donnell was kind enough to grant me an interview a few days before his talk at this year’s AIS…I was unable to attend due to another commitment (the great folks at the Workers’ Compensation Association of New Mexico invited me to their annual meeting)

Here’s my interview with Bill.

MCM – What is the major focus of NCCI’s Annual Issues Symposium this year?

Donnell – Eighteen months into this role, I’ve been getting feedback from industry stakeholders and thinking about the industry. Our approach is the line of business has been around 100 years, and survived that long because we’ve adapted.  If we adapt, will probably survive into the future, if we don’t we’ll become irrelevant.

MCM – Is WC relevant today?

Donnell – We have a financially stable, healthy system, covering north of 90% of the workforce.  The industry and system has a pretty good history of getting injured workers back to work and our focus is on that, and workplaces are safer than they were a long time ago…[we have] a lot to be proud of.

Another component is the whole issue of technological disruption.  [The economy has] shifted from agriculture to manufacturing to service and now service is vulnerable.  This provides perspective as it is kind of scary, but look what’s happened over time; 70 years ago we would have been saying the same thing. The issues are always the same, but things will come faster than they have before…change will happen but this time it will be faster.

MCM – with the rise of automation, autonomous vehicles, the gig economy, increased robotics and artificial intelligence, what could we see in the future?  What we need to do to be relevant in years ahead?

Donnell -Workers’ comp could be a high risk business only with repetitive injuries [from decline in employment in industries with that risk] gone, it would focus on high hazard risks, there would be a smaller but higher risk pool and smaller overall business.

With the whole issue of industry evolution, we have to evolve, we need to move the ball forward. [We need to] talk about the industry’s past success and show where we’ve adapted to change…[the] good news is that we’ve done this before.  We’ll talk about examples of how the industry has evolved…

Thanks to NCCI’s communications chief Dean Dimke for setting this up.