Emerging workers’ compensation trends, risks and questions to keep in mind.
Key Takeaways
- Mega claims and mental health are shifting the workers’ compensation landscape. Prevention and support are more important than ever.
- Strong claims handling can reduce costs and support recovery. Look for return-to-work strategies and clear metrics.
- Stay ahead of changing rules and tools. Think audits, ex-mod shifts and emerging tech.
Unlike the hard market many insurance lines experienced in recent years, the workers’ compensation market has been fairly stable. But agents shouldn’t be lulled into a false sense of security based on recent loss trends. According to workers’ comp data provider NCCI, mega claims (reported losses of more than $2 million) increasingly account for a larger proportion of overall claims dollars — more than $1 billion per year.
Based on the latest workers’ compensation trends, here are some ways to help minimize losses and manage claims.
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Proactive loss prevention
Businesses that allocate time and resources into workplace safety and illness prevention measures typically experience a lower frequency of accidents, which translates into lower loss ratios. But meaningful prevention requires a coordinated effort with an industry leader who understands the unique risks of an insured’s workforce.
One increasingly important area of prevention? Mental health.
Employers today must play a proactive role in addressing mental health, says Becky Pinto, president of Arrowhead’s Workers’ Compensation Program. States are pursuing legislative action to include mental health disorders such as post-traumatic stress disorder (PTSD) and trauma in workers’ compensation coverage, similar to other injury or disability categories.
In response, more employers are offering outreach programs and resources that make mental health support more accessible.
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Proactive claims team
Beyond prevention, a proactive claims process is critical.
A key factor in managing workers’ compensation costs is having a strong claims team that severs as an advocate for the injured worker, says Pinto. For example, Arrowhead’s return-to-work program for a construction industry employer can place an injured employee in a light-duty role — such as admin work in an office setting — until they’re able to resume physical duties. This keeps the employee productive and engaged while supporting recovery.
“Key questions that agents should ask when evaluating a workers’ comp provider are: Who will be handling all claims, and what’s their success rate?” Pinto adds.
Emerging workers’ compensation trends
As the workers’ compensation market continues to evolve, agents need to stay on top of new risks and regulations. “We see the importance of performing a premium audit for every single account at renewal,” says Debbie Sidley, audit & compliance manager for Arrowhead’s Workers’ Compensation Program. “Agents should be aware that over the past several years there have been tweaks to the experience modification factor (“ex-mod”) calculation methodology.”
Contractors, in particular, should be aware of tighter state enforcement around proper worker classification and corresponding class codes. “It’s important to monitor those changes for the states in which we write workers’ comp coverage to confirm that the premium calculations use the corresponding class codes,” Sidley adds.
There’s also growing interest in tech tools. “We’re encouraging wearable devices,” Pinto says. “They’re not widely adopted yet, but they offer so much information that can be gathered to provide managers with immediate responses, like lifting protocols and body movement that can be improved, or what led to an accident.”
Related: A practical guide to reducing on-the-job injuries
Evaluating a workers’ comp program
Stability, long-term carrier relationships, a broad appetite and a focus on loss control are all key signals of a strong workers’ comp program. Here are some useful questions agents can ask to evaluate a provider’s capabilities and performance:
- What’s the carrier’s ultimate loss and allocated loss adjustment expense (ALAE) paid?
- What’s the ALAE paid on closed claims?
- What’s the carrier’s closure rate?
- What’s the carrier’s indemnity paid at 24 months?
- What’s the loss as a percent of ALAE? (The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) reports that the average claims ALAE for the State Fund of California is 11.8%, and for private insurance carriers, the average is 15.23, for example.)
- Does the provider have bilingual adjusters, advanced reporting services, real-time claims reporting and plan-of-action reports?
Arrowhead’s workers’ comp solution brings agents a dedicated team and real-world strategies for managing risk.
“On the front end, a key differentiator is the experience of the underwriting staff,” Sidley says. “At Arrowhead, our underwriters average a dozen or so years in the industry, and each agency has a dedicated underwriting team.”
“We also get a lot of compliments on Quick Quote, our quote/bind portal designed for small accounts,” Sidley adds. Agents regularly praise the platform’s ease of use and the ability to quote without uploading docs — unless they’re ready to bind.
Although Arrowhead is known for its construction industry experience, its appetite is much broader. “Construction is a big part of our book, and we are specialists in construction,” says Pinto. “But we are also a solution for almost every other industry segment agents could possibly be looking for.”
Agents, take a look at our Workers’ Compensation Program to add to your portfolio of insurance solutions.
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This material has been prepared for general informational purposes only, is intended to apply generally rather than to any specific company and presumes appropriate discretion will be exercised regarding any particular situation.