Two Critical Concerns for Work Comp Insurers

Workers’ compensation has enjoyed overall profitability for the past few years. When you consider how technology is reshaping the workplace and the impact of rising claims costs, it’s clear change is on the horizon. What are the near-term implications for insurers? Two key areas of focus are growth and claims handling.

Grow or die

Work comp is the leader in commercial lines in terms of market sophistication, and the increasing use of analytics to compete on pricing. Unless your company is looking to be acquired, the race is on for grabbing market share.

 

 

As illustrated in the chart above, savvy market segmentation and pricing strategies are allowing the top players to secure market share. Companies who want a seat at the table must be willing to adopt the necessary tactics in order to achieve substantial growth.

Additionally, for multi-line property and casualty carriers, expanded product offerings will be essential to reach new customers. For monoline work comp carriers, writing additional class codes and expanding geographic territories will be an important way to expand business.

Manage Severity

Although work comp claims overall are down, severity is up. Since 1995, indemnity has increased 138% and lost-time claims severity has increased 214%. In comparison to previous years, NCCI states the average medical lost-time claim severity grew 5% from 2015 to 2016, an additional 3.8% in 2016. And while the change was negligible for 2017, 3.3% is already projected for 2018.

When embraced early on, predictive models can help stem severity. For example, analytics can determine which claims could skyrocket, ultimate close dates and final payments amounts. They can also pinpoint when to close a claim quickly and when it’s appropriate to involve a more skilled adjuster or nurse case manager.

Get the team on board

Telling a simple and compelling story to your team about the challenges your business is facing and the strategies you are employing to address them goes a long way to getting buy in. For other tips on how to best implement analytics, download the Organizational Readiness for Predictive Analytics checklist.

 

ABOUT THE AUTHOR:

Kirstin Marr, CMO of Valen Analytics, has a passion for building companies that invent leading-edge technologies to improve customers’ lives and solve the inefficiencies that exist in traditional marketplaces. As the chief brand advocate for Valen Analytics, she helps pave the way for Valen’s clients to lead the innovation initiatives required to compete in today’s marketplace. Before Valen, she ran business-to-business marketing for internet technology pioneer and market leader, ServiceMagic.com (now HomeAdvisor).

Kirstin has a long-standing commitment to philanthropy and community leadership. Most recently, Kirstin is leading the Insurance Careers Movement coalition, a grassroots initiative of more than 850 insurance organizations raising awareness of what insurance has to offer young professionals. She has been involved in several non-profits focused on Science, Technology, Engineering and Mathematics (STEM) education, among other non-profit causes.