This open mic session at the California Workers Comp & Risk Conference in Dana Point featured insurance industry leaders identifying emerging market trends that are important to employers in California. Panelists included moderator Pamela Ferrandino, National Practice Leader at Willis North America, Bill Rabl, Chief Operating Officer at ACE Risk Management, Robert Darby, President at Berkshire Hathaway Homestate Companies and Former Chairman of WCIRB, Duane Hercules, President at Safety National, and Michele Tucker, Vice President at CorVel.
The panelists indicated that their short-term outlook on rates was flat to slightly higher, but not as high as seen over the last couple of years. There are more carriers entering the California marketplace, which is leading to more competition for first-dollar accounts. From the self-insured and large deductible standpoint, the amount retained by the employer with a deductibles or self-insured retentions tends to be more important than the rate because the goal of these loss-sensitive programs is for the carrier to only attach on unusual claims such as catastrophic injuries.
Managing medical costs also continues to be a challenge. Opioids are still driving costs, so there must be an aggressive pharmacy management program in place. The industry is starting to see complications such as organ damage arise from extensive opioid abuse. This could become a cost driver in the future. Almost half the opioids in California are physician dispensed, so it may be necessary to address this issue legislatively as other states have done.
Predictive analytics are becoming increasingly important in the workers’ compensation industry. Some TPAs and carriers are doing excellent work in using psychosocial questions to identify issues that could complicate claims handling and increase costs. This allows them to intervene and devote additional resources to these claims. Analytics are also useful in the pricing process to assist carriers in identifying accounts that are performing above and below average and trends related to them.
The impact of presumption claims on municipalities is significant, and it leads to significant adverse loss development on their long-tail claims. Defending these claims is extremely difficult and, once accepted, the claims have a tendency expand. Claims for high blood pressure can eventually morph into claims for advanced heart disease or a heart attack. In many municipalities, a large percentage of their police officers and firefighters retire under these presumption claims. There are currently bills sitting on the Governor’s desk that would expand presumption laws in California, including one bill that would create presumptions for certain healthcare workers in the private session. If these bills are signed, it will increase California municipalities’ workers’ compensation costs even more.
Finally, panelists were asked what they expect the key issues will be three years from now. Panelists predicted that mobile technology and the ability to communicate with injured workers will advance through apps that help with early intervention. They also expect to see an increased focus on wellness to address co-morbidities. Finally, everyone anticipates that within three years we will be talking about yet another California workers’ compensation reform bill and the continued expansion of presumption laws.