DESPITE BALANCING ACT, CHALLENGES REMAIN FOR WORKERS’ COMPENSATION MARKET

Workers’ compensation markets may have improved by a 7 point ratio from 2012 to 2013, but experts expected many of the same challenges to remain through 2014. According to PropertyCasualty360, National Council on Compensation Insurance reported the general growth is a positive sign for the market, with premiums growing by 30 percent and an 8 percent market share. Yet, underwriting losses continued to increase, to reach about $98 million.

“We are finally starting to see an industry in balance with these results,” said NCCI President and CEO Steve Klingel in a statement released with the firms annual analysis of the market. “Today, industry costs are largely contained, claims frequency continues to decline, and the system in most states is operating efficiently. In short, the market is operating as it should on behalf of most stakeholders.”

“Overall, the workers’ compensation line showed a number of positive results in 2013,” continued Kathy Antonello, NCCI Chief Actuary. “Going forward, however, some challenges remain. Slow growth in employment is impeding robust premium growth. And, while investment gains are strong, current yields are likely not sustainable in today’s low-interest-rate environment.”

The optimization of underwriting and claims management software will help insurers continue this balancing trend and growth of the market, but in order accomplish this firms may need to take a second look at the tools they use in these processes. For many, adopting higher-quality predictive analytics may be a necessary step.

With net premiums increasing by 5.4 percent and an operating gain of 14 percent in 2013, workers’ compensation insurers may not feel the need for swift action, but many of the same challenges faced in 2013 remained in 2014, and firms will see that progress begin to slow again. Adopting a powerful business intelligence platform can help bolster operations around underwriting, reversing the loss trend and strengthening these processes.

Ultimately, the risks that insurance providers face are never going to go away. However, by investing in the tools that will enhance fraud detection and risk assessment, firms will be able to approach these risks from a stronger position and minimize the chances of loss. This will ensure a more stable future of growth and maximize the future opportunities the market will bring.

Continued growth and shrinking losses are what insurance firms need to see to around the bend, and start strengthening the economy from their end.