Max Dorfman, Research Author, Triple-I
According to Donna Glenn, chief actuary for the National Council on Compensation Insurance (NCCI), “the field of workers’ compensation responds and adapts remarkably well to economic changes.” “The pandemic brought new occupational diseases into the system, but these were already offset by a decrease in other types of damage in 2020.”
Glenn made the comments in a new Executive Exchange with Sean Kevelighan, CEO of Triple-I. She noted that the employee comp industry was in a strong position before the pandemic, and consequently afterwards. This includes seven years of underwriting profitability.
“Strong employment and wages are rising, which is driving the workers’ comp system,” Glenn said. “The strength of the job market is overwhelming.”
Kevelighan and Glenn found that changing work patterns will also affect the incidence of workers’ compensation claims.
“Frequency went down in 2020 because of store closures,” Glenn said. “As workers returned, damage activity came back. However, remote work reduces overall claim frequency. This is the new normal.”
They also discussed the potential for rising medical costs.
“Medical costs have been fairly stable, but there’s talk of medical costs getting out of control again,” Kevelighan said.
“Drug prices have gone up,” Glenn agreed, adding that medical inflation “is tame compared to general inflation. The medical industry has benefited from regulation, including physician fee schedules, treatment guidelines, and prescription drug formulations, which contribute significantly to the employee-relative cost control system.”
In addition, fewer procedures are performed in hospitals. Instead, they take place in an outpatient setting or outpatient service center.
Glenn observed that physical therapy and reducing opioid use also helped. However, she signaled there could be potential mental health issues.
“PTSD, especially in first responders, comes with worker compensation,” she said. “But mental health is much broader than PTSD. We have to be very careful about how we take care of the workers.”