While it's important to celebrate the centennial of the workers'compensation system and appreciate how much worse off we might bewithout this crucial safety net, we'd be remiss not to consider theconsiderable challenges facing insurers and risk managers in theyears and decades to come. 

A number of critical macro-trends—both positive and negative—arelikely to have a major impact on insurers and their stakeholders asthe second century in workers' comp unfolds. Among them:

The Changing Workforce

We're likely to see an aging workforce, in part due to the needfor many to stay on the job so they can build more personal savingsand afford retirement. Having more experienced workers usuallymeans lower frequency of claims, but at the price of higherseverity. Medicare Secondary Payer considerations will likely bemore common as an increasing number of people work past the age of65, adding both administrative costs and logistical headaches.

Meanwhile, we're dealing with a much heavier workforce, asobesity reaches epidemic proportions. That factor alone couldincrease claims frequency and severity, particularly in terms ofback injuries, while a growing number of workers will likely haveto cope with the effects of diabetes and high bloodpressure. 

In addition, we're going to be managing a far more diverseworkforce over the next 100 years, with many blue-collar employeesrequiring training, written safety information and directsupervision in their native languages, rather than only inEnglish.

We are likely to see far more telecommuters as well, which meansemployers might have less control over working environments. Onewoman in Oregon, for example, recently was granted comp benefitsafter tripping over her dog and breaking her wrist while gettingfabric samples out of her garage for a work presentation. On theother hand, this trend might make it easier and quicker to getpeople back on the job since telecommuters don't have to travel towork.

I believe we're likely to see greater employer emphasis onwellness programs, as more organizations try to promote a healthierworkforce to lower workers' comp as well as health-insuranceclaims. (I have personally lost 15 pounds and seen my cholesterollevels drop dramatically since joining my company's subsidizedon-site gym four months ago.)

But we're also more likely to have a smarter workforce, with agreater reliance on advanced technology allowing people to do theirjobs not only more efficiently, but more safely. That leads to ournext section:

Tech To The Rescue!

You can expect to see more sophisticated electronic monitoringof the workplace, particularly with industrial jobs. This trend isalready accelerating in commercial auto, and is likely to pick upsteam in factory, warehouse, packaging and shippinglocations—although office workers won't necessarily be excused fromthis development. The safety and cost-containment imperative islikely to overcome any Big Brother concerns.

From the insurer's perspective, we'll see more automation of theclaims process. The more time adjusters are free to deal withclaimants and medical providers, and the less time they spendchasing down data and filling out documents, the better.

Predictive modeling, while no magic bullet, could provide acompetitive advantage to those carriers that treat data as astrategic asset. Proactive analysis can raise red flags and headoff potentially bogus claims, as well as steer claimants towardmore productive and cost-effective treatments.

Telemedicine, with remote examinations and diagnoses, couldprovide easier and cheaper worksite access to health professionalswho specialize in occupational medicine. 

While we're at it, why not try “teleadjusting” as well? Ratherthan waste travel time or lose invaluable face-to-face assessmentsvia telephone interviews—or worse, investigation viae-mail—teleadjusting might make it easier to interview moreclaimants, supervisors and witnesses, while reviewing accidentlocations without actually having to be on site.

Social media will become a bigger factor in comp as well on anumber of fronts. It can certainly serve as another potentialclaims-fraud investigation tool. But social media could alsoprovide an invaluable loss-control and safety-communicationsplatform.

Why not have mobile apps for workers' comp? Mobile technologycould very efficiently gather first notice of claims, as well asstatements and documenting pictures for incident reports, whilemonitoring an injured worker's ongoing rehabilitation andrecovery.

We're already seeing major administrative savings by replacingchecks with debit cards for claimants and providers. Theintroduction of the digital wallet, with mobile devices widely usedas a credit card, will only accelerate this positivetrend. 

The development of a nationwide system of electronic medicalrecords—being driven by healthcare reform—will likely have a bigimpact in patient care and claims investigations in comp. Thatleads to our next section:

Medical-Cost Containment 

A growing share of the comp-claims dollar is going to paymedical expenses rather than replacement wages—with medical up toabout 60 percent of the pie now and likely to rise to 70 percentbefore this decade is out, if no major changes are made.

If the comp system is to survive to celebrate its bicentennial,insurers and employers will have to get a handle on the growth ofmedical costs—particularly when it comes to expensive prescriptiondrugs.

Healthcare reform is likely to have a major impact on comp,again both positive and negative, should the law surviveconstitutional challenges and go into full effect as scheduled in2014. 

The near-universal coverage called for will shrink the ranks ofthe uninsured substantially and likely decrease the number of compclaims filed fraudulently by those without health insurance. Butthe addition of millions of health-insurance policyholders maydrive up demand for medical services, thus raising costs, limitingavailability and increasing wait times.

In addition, cuts in Medicare-reimbursement levels might have animpact on states where comp payments are based on federalbenchmarks. However, there could also be cost-shifting in stateswhere providers can make up what they lose with Medicare patientsby charging higher rates to treat comp claimants.

The biggest question is whether the revamped health-insurancesystem might eventually absorb the medical component of workers'comp. Could workers' comp survive if medical and replacement wagesare covered under two different policies? The majority wouldsuggest comp could not endure under those conditions, but thatexistential threat is only theoretical at this point.

In the meantime, expect comp insurers to expand the use ofmedical networks to secure doctors who are better trained to handleoccupational injury and more concerned with getting patients backto work, at least for modified duty.

You can also expect the widespread adoption, particularly byproviders, of the Explanation of Benefits model used by healthinsurers to cut down on fraud. 

Evidence-based medicine and pharmacy-benefit management willbecome even more sophisticated, as insurers command greater amountsof data to show what works.

There are other threats to worry about—including the ongoingrisk of terrorism and the potential for new occupational exposuresfacing those working with emerging technologies—but thesemacro-trends will suffice for now.