Q: What are the major issues and challenges facing workers' compensation carriers? How has the business changed in recent years, and what has driven the changes?
A: Gary Baxter, MEMIC : Currently, the major challenge facing MEMIC and other workers' compensation carriers is how best to retain and acquire high-quality customers in a soft market. MEMIC's customers place a high value on our loss control and claims services so we're not that susceptible to undercutting on price. Maintaining our high level of service delivery in this period of increased competition is our primary focus.
An interesting trend that has developed in recent years is that medical costs are now close to 60 percent of the total claim payout for workers' compensation. Historically, indemnity costs have always been higher than medical costs. The combination of benefit reforms and increased medical inflation appear to be the drivers behind this fundamental shift.
A: Arthur Cadorine, ISO: Reform measures, an aging and changing workforce, and the disparity between workers' compensation and healthcare costs are causing underwriters to look closely at their business to understand how these issues not only impact their profitability but also how they interrelate with each other. As a result, carriers should better understand their data at a much more granular and comprehensive level in order to create an effective strategy.
A: Eddie Jones, Fiserv: Technology has transformed workers' compensation from a line of business written as an accommodation to a profitable target market for carriers. For example, the Internet has radically changed the workers' compensation business model, increasing the number of channels to place coverage and facilitating communication among underwriting, claims and statistical reporting. Many companies have entered the market writing monoline workers' compensation, using the Internet exclusively for the rating and evaluation of submissions. Underwriting is done on an exception basis only, with carriers aggressively using loss control to maintain the profitability of this book of business. Faster claims notification and better communication with injured workers reduces the potential for litigation and fraud.
Q: Which technologies can workers' comp carriers use to address these challenges and opportunities?
A: Baxter MEMIC: Business intelligence and predictive analytics are critical technologies for carriers in a soft market. Successful carriers need to know the characteristics of a profitable customer, seek out new customers with those characteristics and work diligently to retain existing customers with those characteristics. In the area of increasing medical costs, carriers need to be diligent in providing active case management, utilization review, drug prescription programs and medical bill repricing to keep those costs in check.
Mobile worker enablement has great potential for service-oriented companies to put their key people out with the customers where they belong. Advances like IP telephony allow a mobile worker to turn any location with a network connection into their office with full data and voice capabilities.
A: Cadorine, ISO: Technology has advanced so carriers are better able to examine how a transactional model can serve multiple purposes. The more detailed data they can collect on their risks in real time, the better they are able to identify and address problem areas, confirm they are on the right track, and, more recently, create predictive models to better plan for the future.
Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio