Gallagher Bassett We Guide. We Guard. We Go Beyond.

According to the NCCI (National Council on Compensation Insurance), the US workers' compensation insurance industry is in remarkably good financial shape - for a change. Several articles in the trade press tell aspects of this story, but this summary probably wraps it up best. The proverbial bottom line requires only one stat: the combined ratio for the industry in 2018 came in at 83%, the best it's been since the 1930s. This may well be one more manifestation of what many economists and some actual people are calling the Goldilocks Economy.

At the 2019 NCCI Annual Issues Symposium last week, NCCI Chief Actuary Kathy Antonello gave the much anticipated "state of the line" presentation. Pretty boring. Everything was good. In addition to the glowing combined ratio, surpluses were in great shape, problem child states like California, Florida, and Illinois actually saw premiums go down while record levels of employment pushed up the premiums written. Why this giddy whirl of good news?

Some possible factors:

How much of this good news can you depend on going forward? A quick look at our short list shows that some factors are structural, like better systems and AI that works, while others may be cyclical, like the full employment economy. The comp industry is shaking off the dust of ages and getting smarter and more efficient and workplaces continue to become safer - but we still have an aging workforce and an economy that looks a lot like a carnival ride. Don't plan on spending those surpluses just yet.

A different view of the full employment economy:

We Told You So

Medical management in workers' compensation has largely been financial management. Starting back in the early 90s, the first PPO arrangements for comp were all about the discounts. To a large extent, any provider willing to accept the terms of the contract who did not have outstanding warrants or an arm-long list of malpractice suits could become a preferred provider. My, have we learned a lot since then.

Today's addition to the growing pile of evidence that quality matters more than price comes from the non-profit Leapfrog Group which has been assigning letter grades - from A to F - to hospitals since 2012 and is a tougher grader than the federal government (which doesn't issue failing marks). The latest Leapfrog rankings, released last Wednesday, give failing or near-failing classifications to 168 hospitals across the US.

Now, does this really make a difference? Consider this: relative to the A rated hospitals, patients at C-rated hospitals on average face an 88% greater risk of avoidable death, while those at B-rated hospitals on average face a 35% greater risk of avoidable death. That's just "avoidable death," mind you, a phrase that only a researcher can love. We may reasonably assume that the difference in the "OOPS Factor" extends to non-fatal errors as well, the kind of medical errors that can turn a six week indemnity into a permanent total claim with an MSA and all the trimmings.

What is your carrier or TPA doing to minimize or eliminate the exposure of your injured employees to, ah - how to put this delicately? - say enhanced avoidable death traps in the name of discounts? Have you had that conversation? Should you?

Quick Take 1:
Health Promotion in the Workplace Revisited

Medical management in workers' compensation has largely been financial management. Starting back in the early 90s, the first PPO arrangements for comp were all about the discounts. To a large extent, any provider willing to accept the terms of the contract who did not have outstanding warrants or an arm-long list of malpractice suits could become a preferred provider. My, have we learned a lot since then.

Today's addition to the growing pile of evidence that quality matters more than price comes from the non-profit Leapfrog Group which has been assigning letter grades - from A to F - to hospitals since 2012 and is a tougher grader than the federal government (which doesn't issue failing marks). The latest Leapfrog rankings, released last Wednesday, give failing or near-failing classifications to 168 hospitals across the US.

Now, does this really make a difference? Consider this: relative to the A rated hospitals, patients at C-rated hospitals on average face an 88% greater risk of avoidable death, while those at B-rated hospitals on average face a 35% greater risk of avoidable death. That's just "avoidable death," mind you, a phrase that only a researcher can love. We may reasonably assume that the difference in the "OOPS Factor" extends to non-fatal errors as well, the kind of medical errors that can turn a six week indemnity into a permanent total claim with an MSA and all the trimmings.

What is your carrier or TPA doing to minimize or eliminate the exposure of your injured employees to, ah - how to put this delicately? - say enhanced avoidable death traps in the name of discounts? Have you had that conversation? Should you?

Quick Take 2:
What's A Little Cheating Among Friends?

In our last issue we took a quick look at the prevalence of various health promotion programs in the US workplace. Dr. Jennifer Christian recently took a different view of the same matter in Workerscompensation.com. If you don't know who Dr. Christian is, you should. She has been one of the leading - and wisest - voices on employee health for a generation now.

If you want a quick overview of where we stand today in terms of workplace health, read this short piece. It's brief, cogent, and to the point. A study published in JAMA (Journal of the American Medical Association - Big Joss in our business) once again showed that a poorly designed wellness program failed to deliver the goods. Dr. Christian takes a look at why this keeps happening. She asks, "If not now, WHEN will employers stop buying weak wellness programs? I continue to worry about low quality programs discrediting the whole idea."

If you're starting to get your summer reading list together, she has a very good recommendation. "For more information on the impact of organizational risk factors on health and how to minimize them, see this remarkable book Preventive Stress Management in Organizations which puts it all together." To paraphrase a well-known ad campaign from a few years ago, your employees' health is a terrible thing to waste.