Legislation, regulation, first responder presumptions and the new ‘gig’ economy throw up new challenges for workers’ compensation insurers.
It’s been a busy few years for workers’ compensation insurers.
They have had to address challenges around the use and costs of prescription drugs, medical inflation and technology, an ageing workforce and growing obesity. All amid a climate of historically low interest rates.
These issues will persist, but now the industry must also manage emerging risks, such as legislative and regulatory changes, first responder presumptions and employment classifications.
Let’s look at each of these in turn.
Legislation & regulation
There have been 76 loss cost/rate reductions in the last three years, compared to 18 loss cost/rate increases, according to NCCI state advisory forums.
Rate reductions are adopted when claim dollars decrease, and some think that the fall in claim costs have reduced benefits to injured employees. With profitability working its way back into the industry, some constituents feel the timing may be right to increase these benefits.
On a separate note, the Florida market is readying itself for regulatory changes, including:
- an increase in the duration of temporary total disability (from 104 to 260 weeks)
- certain caps on attorney fees being declared unconstitutional
Estimates for these unfunded liabilities stretch to $1billion, and the recently announced rate increase, effective from 1 December 2016, will be 14.5 per cent.
First responder presumptions
Several states already have special occupational disease presumptions tied to certain first-responder job classes (e.g. healthcare, police and so on). Typical injury/claim reporting rules are waived, and the illness is assumed to be out of employment unless proved otherwise by a carrier.
We’re likely to see pressure on other states to bring in similar presumptions, and emerging occupational diseases may come from other job classes. And with job growth forecast for the healthcare industry, we can expect increased exposure to presumptive occupational disease claims.
Contract work and the ‘gig’ economy are blurring the lines between employers and employees. It is predicted that 40 per cent of American workers will be independent contractors by 2020.
But are drivers for Uber and Lyft considered employees, for instance?
There will probably be multiple interpretations of employer/employee definition, as workers’ compensation rules are decided by state,
Please contact Aaron Bueler, Executive Vice President and Managing Broker at JLT Re on +1 206 303 9347 or email firstname.lastname@example.org