Industry Awards & Events


Next week Jim Lynch will be in Boston for the annual conference of an I.I.I. subscriber, the Workers Compensation Research Institute (WCRI). Here’s his preview:

WCRI is known for its painstakingly objective analyses of workers comp trends in more than a dozen large states. Lately mainstream media have noticed WCRI, particularly this New York Times article, in which researchers found that when the prices of common dosages for back pain were capped, California doctors switched to dosages whose prices were not capped. This allowed them to charge about five times more per pill.

Physicians tend to charge considerably more than pharmacies when they dispense drugs, a phenomenon WCRI studies regularly. The costs and consequences of physician prescriptions is one of the main topics of the first morning of next week’s conference. (Registration and other details here.)

Day Two will feature a topic in which I’ve become more interested in recent weeks – the ability to opt out of the workers comp environment entirely.

For about a century workers comp has been a pact that has bound employers to employees in liability law. Workers give up their right to sue if they are injured on the job. Employers agree to pay for all injuries at work, regardless of how they occurred.

For decades Texas was the only state that didn’t follow these rules. Employers could opt out of the system, but they lost the considerable common law defenses employers usually enjoy. Workers’ Comp Insider has a nice overview of the Texas system.

In 2014 Oklahoma became the second opt-out state. Tennessee lawmakers have proposed their state become the third, even as Oklahoma’s law faces a constitutional challenge, as Business Insurance reports.

At the WCRI conference opt-out will get a hearing. A representative from retailer Nordstrom, which supports opt-out measures, will discuss the matter with an AFL-CIO representative and one from PartnerSource, a company that helps successfully opt-out.

Follow my live-tweeting of the conference @III_Research and check back for another blog post.

Update: Aw, shucks. I learned early Thursday that the opt-out session at the WCRI conference has been canceled. I’ll still be going to the conference.

I.I.I. offers facts and statistics on workers compensation.

I.I.I.’s new California representative Janet Ruiz brings us this timely report from the insurance industry’s first philanthropic roundtable of the new year:

The first of three 2015 insurance industry philanthropic roundtables was held earlier this week in Woodland Hills, CA at Farmers Insurance to discuss the landscape of philanthropy with the theme of disaster resilience.

Speakers at the meeting presented case studies of successes such as the partnership of Farmers Insurance with the Saint Bernard Project to rebuild Joplin, Missouri. The Insurance Information Institute (I.I.I.) discussed the role of catastrophe communications in getting important information out to media and consumers before, during, and after a catastrophe. Team Rubicon talked about their mission to bridge the gap for veterans and how they engage veterans, first responders and volunteers in rebuilding communities after a disaster.

The Insurance Industry Charitable Foundation (IICF) leads the philanthropic roundtables attended by member insurance companies involved in philanthropy and community giving. It was born out of the passion of insurance professionals to make a positive community impact.

The IICF Early Literacy Initiative and Sesame Workshop Partnership recently launched – ‘Every Day is a Reading and Writing Day’ – working to provide every American child the opportunity to read and write. As Melissa Duncan, IICF Western Division says: “Early education makes true social progress.”

Bill Ross, CEO, IICF wrapped up the roundtable by reminding all of the impact the insurance industry has giving $1 billion annually in direct giving and sponsorships to charity.

It was a powerful session!

You can read more on the insurance industry’s contribution to community and charitable causes here.

I.I.I. chief actuary James Lynch reports from Day 2 of the WCRI annual conference in Boston:

Health insurance and workers compensation are sort of kissin’ cousins, in that changes that affect one inevitably affect the other.

But that’s my metaphor. Dr. Richard Victor, executive director of the Workers Compensation Research Institute (WCRI), likens the impact of health care reform to a hurricane.

Like a storm whose path is not quite defined, health care reform could take a significant toll – but we don’t know precisely where. Since workers comp differs from state to state, the impact of the Affordable Care Act (ACA) will differ from state to state. Like a good weatherman, Dr. Victor told an audience of about 400 at WCRI’s annual conference in Boston on Thursday he could make some educated guesses what might happen.

He is assuming the ACA is enacted exactly as written – a tough assumption but as good a starting point as any. In that case, the increase in insured Americans will increase demand.

The marketplace might decrease the use of doctors, relying instead on well-trained nurses or even sophisticated computers to help provide care.

Or doctors might raise prices in the face of rising demand.

What actually happens will differ by state. Some states make it difficult to take diagnosis and treatment out of the doctors’ hands. In those states, medical costs – and their kissin’ cousin, comp costs — are likely to rise. Elsewhere, the effect will be muted.

Other insights:

● Health care reform will result in a healthier work population. This will tend to help the comp system, because healthy workers are less likely to get hurt on the job, and if they do get hurt, they get well faster.

● Changes in billing, Dr. Victor said, will “absolutely” lead to upcoding – in which a doctor exaggerates the severity of a treatment to receive a bigger reimbursement. The practice is well-documented in workers comp, he said, citing examples from Florida and California.

● Changes are likely to shift into workers compensation. That’s because many employers are increasing deductibles that employees pay for treatment. Workers comp, meanwhile, has no deductibles and no co-pays – giving an employee the incentive to label an injury as work-related.

I blogged about Day 1 of the conference here. Other highlights from Day 2:

● Alex Swedlow, president of the California Workers Compensation Institute (CWCI) noted that even after all appeals are exhausted only about five percent of denials of comp claims are overturned. Swedlow also said evidence-based pain management guidelines effectively control costs; and a comparison of California and Washington pharmaceutical costs show that more cost savings are possible.

● Harry Shuford, chief economist of the National Council on Compensation Insurance (NCCI), argued that underwriting cycles are closely linked to bond yields and that when it comes to managing their business, insurers in the long run “do a much better job than other financial intermediaries” like banks.

Workers compensation insurance will have to move quickly to keep from being a net loser from health care reform, said Dr. Jonathan Gruber, one of the architects of what ultimately became the template for the Affordable Care Act (ACA).

Dr. Gruber, an MIT economist who helped construct the Massachusetts health reform that the ACA modeled, spoke to more than 400 attendees at the Workers Compensation Research Institute (WCRI) conference in Boston.

Health care reform should help the workers compensation system, he said. Fewer workers will be uninsured, so fewer people will get injured over the weekend and then claim on Monday they got hurt at work.

But Dr. Gruber, an MIT economist, noted that the comp system is incredibly inefficient. It pays higher rates for services than most health plans. And it changes slowly, which could be a big disadvantage as the ACA forces efficiency on the other parts of the health care system – hospitals, doctors and health insurers. If the comp system can’t keep up, the rest of the system will find ways to dump costs on it.

Dr. Gruber said it will be three years before we can tell whether ACA has been successful. At this point – in ACA’s early days, its proponents and opponents are “saying too much.”

Gruber also gave a nod to researchers like those at WCRI. With ACA’s many moving parts, he said, it will be important to intelligently determine which of those parts are truly working.

Day One of the WCRI conference also featured two examinations of how changes in state comp laws play out.

The first showed how Texas successfully reduced the rate of claims through changes enacted in 2002, 2003 and 2005. The changes brought individual claims under greater scrutiny.

The good news: the rate of claims in Texas lagged those of 15 states studied, said WCRI senior analyst Carol Telles. The rate of claims from chiropractors fell more sharply than other professional services, though Texans continue to use chiropractors more than the other states.

Costs per claim, though, increased, in part because the changes aren’t free. It costs money to review claims. Any changes to a workers comp system must consider whether savings will be able to justify those costs.

The second study showed how Illinois took a more blunt approach in 2006. It cut fee schedules 30 percent across the board. One interesting result, said senior public policy analyst Rebecca Yang: costs per claim fell, as you might expect, but only by 24 percent overall.

Among the reasons: the rate of claims increased, and there were signs that doctors were billing for more complex office visits than before.

Day Two of the conference will take a longer look at the impact of ACA on workers comp. Other sessions will look at how the economy drives workers comp results; accountable care organizations; and medical dispute resolution.

With the Affordable Care Act (ACA) at center stage, interest is high in this week’s workers compensation conference in Boston, Massachusetts.

We read a lot about how ACA is changing health insurance and the world of business, but an effect of less renown is how the health law will affect workers compensation insurance.

Check out previous T+C posts on this topic here and here.

The conference, sponsored by the Workers Compensation Research Institute (WCRI), will feature health care experts like economist Jonathan Gruber, an MIT professor and one of the architects of the ACA, teasing out how health care and workers comp will intertwine in the coming years.

More than a dozen media organizations are scheduled to attend, from industry blogs to national media. I.I.I. will be there, too, with chief actuary James Lynch reporting and tossing off the occasional tweet @III_Research under the hashtag #WCRI.

WCRI is an independent, not-for-profit research organization that provides high-quality, objective information about public policy issues involving workers compensation systems. The conference is March 12 and 13, with details here.

A roundup of I.I.I. workers comp work can be found here.

A survey conducted by the Insurance Information Institute (I.I.I.) at its 18th annual Property/Casualty Insurance Joint Industry Forum found that property/casualty insurance industry leaders believe Congress will delay implementation of the Biggert-Waters (BW) reforms to the National Flood Insurance Program (NFIP).

Some 75 percent of respondents expect Congress will delay implementation of the Act intended to help reduce the debt of the NFIP, a debt now estimated at more than $25 billion, by bringing rates charged more in line with the risk and losses in flood-prone areas, the I.I.I. survey revealed.

A majority of respondents to the survey—93 percent—also believe the Terrorism Risk Insurance Act, which is set to expire at the end of this year, will be reauthorized by Congress.

Meanwhile, a panel of industry chief executives agreed that a repeat performance of the property/casualty industry’s stellar 2013 performance will be hard to repeat.

The CEOs said higher rates, fewer-than-normal catastrophes, and strong stock market returns seem likely to make last year one of the best of the past decade.

But new challenges in growth and price competition make a repeat performance unlikely this year, the CEOs said.

By lines of insurance, only 35 percent of I.I.I. survey respondents believe there will be an improvement in profitability in personal auto in 2014, while 45 percent expect an improvement in homeowners profitability.

Only 40 percent expect an improvement in profitability in commercial lines, while 50 percent expect an improvement in workers compensation.

Looking at economic growth, 40 percent of insurance industry leaders think the U.S. economy will accelerate and 58 percent think it will remain the same, according to the I.I.I. survey.

Dr. Steven Weisbart, senior vice president and chief economist with the I.I.I. said:

Many economic forecasts say that the U.S. and most global economies will grow stronger in 2014, and this means a greater need to protect more assets and income, which leads to greater insurance premium volume.”

Some 30 percent of survey respondents believe that premium growth will be higher in 2014; 42 percent believe it will remain flat; and 28 percent believe it will be lower.

In terms of capacity, as measured by policyholders’ surplus, 73 percent of respondents expect it to increase; 20 percent believe it will remain flat; and 7 percent believe it will decrease.

Some 68 percent believe the combined ratio (the percentage of each premium dollar a property/casualty insurer spends on claims and expenses) will be higher in 2014 compared to last year.

The Insurance Industry Charitable Foundation’s (IICF) Week of Giving, an eight-day industry-wide volunteer event kicks off Saturday across the U.S.

During the week (October 12 – 19, 2013), teams of insurance industry volunteers will provide three or more hours of volunteer service at neighborhood and community nonprofit organizations.

Since 2001, the insurance industry has generated over 166,000 hours of volunteer service, serving over 150 nonprofits nationwide, and engaging thousands of volunteers in 36 states.

The IICF provides online signup for volunteer teams and coordinates contact with the charities for which volunteers work.

For a glimpse into last year’s IICF Week of Giving check out this video:

The 17th annual Property/Casualty Insurance Joint Industry Forum will be held tomorrow at the Waldorf-Astoria Hotel in New York City.

The Forum, sponsored by 16 leading property/casualty insurance trade associations, was created to provide p/c insurance and reinsurance company leaders with an opportunity to meet and discuss topics of general interest.

Thomas J. Donohue, president & CEO, U.S. Chamber of Commerce, will be the keynote speaker at the event.

A panel of experts will first discuss the insurance industry from the perspective of those who regulate, analyze and write about the business.

This will be followed by the CEO panel where industry leaders will discuss general trends in industry services.

You can follow the Insurance Information Institute’s live Twitter feed on Tuesday.

This landed in my inbox a few days ago. If in the course of the past year you’ve built an insurance website, created a mobile app or made an online film or video, you may want to submit your work for consideration for a Webby Award.

The International Academy of Digital Arts and Sciences just opened its call for entries for the 17thAnnual Webby Awards.

Hailed as the “Internet’s highest honor” by The New York Times, The Webby Awards celebrate the year’s best websites, interactive advertising and media, online film and video, mobile and apps, and social experiences.

If your company is interested in submitting for a Webby Award, the category to choose is: Financial Services + Insurance (Interactive Advertising). This is for the sites promoting financial services, information, or insurance on behalf of a brand.

The early entry deadline to submit works for consideration is October 26, 2012, and the nominees will be announced April 2013.

Judges include Tumblr founder and CEO David Karp, Instagram Co-Founder Kevin Systrom, and media mogul Arianna Huffington among others.

Entrants compete not only to win a Webby, but to deliver their 5-Word Speech. Since 2007, Webby Awards 5-Word Speech videos have garnered over seven million views on YouTube.com/webby

Worth checking out.

After a record year for natural catastrophes, a tepid economic recovery and ongoing low interest rate environment, insurers are focusing firmly on underwriting discipline.

This was a key message communicated by insurer and reinsurer CEOs in a panel discussion at the 16th annual Property/Casualty Joint Industry Forum #JIF2012 earlier this week.

Industry CEOs representing small and large, public and private, agreed that with the still-challenging investment environment, underwriting discipline was more important than ever.

Lori Dickerson Fouché, president & CEO, Fireman’s Fund, summed things up:

“Hope is not a strategy, as much as we would like it to be. It comes down to back to basics in terms of the business. We cannot rely on investment results. Underwriting discipline, operational effectiveness, and pricing ­– these are the basics of running an insurance company that we have to strengthen to improve results.”

A survey conducted by the Insurance Information Institute (I.I.I.) of P/C insurance industry leaders at the Forum revealed that most believe the worst of the financial crisis is over and that the industry is now in the early stages of a hard market.

Seventy-five percent expect an improvement in profitability in 2012; and in fact, 72 percent believe the industry is on the road to recovery.

The poll questions and full results are available here.

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