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

Something about putting up a new calendar makes people want to forecast the new year and we risk mavens are no different. For example, the folks over at WealthManagement.com have peered into the crystal ball to check out one of our favorite topics, cyber risk, in The Four Biggest Cyber Risks of 2019". Cyber risk is the fastest growing, or should we say metastasizing, insurance field on the plant right now. The report from Wealthmanagement.com sees these four horsemen galloping at us:

These predictions look pretty solid to us, but for a slightly different look at the same issues, check out 2019's possible biggest hits as foretold by Experian here. Every aspect of our digital economy will be subject to new and improved hack attacks in 2019. You can take that prediction to the bank-er, but maybe you should check the bank's cyber security first.

Another Major American Industry Threatened by Foreign Competition

Now here's a field that we used to dominate, but in 2018 we saw competitors from overseas starting to move in. According to an article in Business Wire, two of the ten most ridiculous lawsuits filed in major jurisdictions last year, as ranked by the Institute for Legal Reform (ILR), were not Made in America. One was filed in The Netherlands and one in - gasp - Canada.

We can still claim leadership, however, since the #1 lawsuit originated in California where a judge ruled that any business selling coffee must, under the provisions of the recently passed Proposition 65, display a warning label that coffee contains acrylamide, a chemical that may cause cancer. This issue is bigger than labels on coffee cups. Prop. 65 has become so broad that even Disneyland has a cancer warning label.

Why worry? "These individual lawsuits may be good for a laugh, but the collective impact of excessive litigation on society is no joke," said ILR President Lisa A. Rickard. "Our tort system costs every U.S. household more than $3,300 each year, on average." How much of that $3,300 might come out of your corporate pocket? Plenty perhaps. Do you sell anything in California that might have an alleged cancer-causing ingredient? Note that the acrylamide in coffee is not a suspected carcinogen according to the National Cancer Society, so innocence may be no excuse. Is Prop 65 on your risk plan?

The Canadians, however, get extra points for the lawsuit against a French restaurant in Vancouver, BC. The plaintiffs complained that the waiter was rude, but the waiter explained for the defense that he was not rude, he was merely being French.

What About Time Loss?

Once upon a time, in a land far away, workers' comp managers and claims adjusters worried about the cost of time loss. In that distant time, indemnity payments constituted some 60% of total comp costs and managed care was a strange art practiced by something called an HMO. Then medical costs took off, like pink-eye running rampant in a nursery school class.

As Peter Rousmaniere noted in a recent column for Workerscompensation.com, the Workers' Compensation Research Institute (WCRI), among other organizations, has done an excellent job helping the comp insurance industry get its arms around rising medical costs. Not too many years ago, medical care costs nationally were increasing in the double digits and care costs specifically for comp were growing at an even faster pace. That's old news now. PwC's Health Research Institute expects medical costs to rise at 6% in 2019, consistent with the last five years, which have run about 5.5% to 7%. Overall, comp is tracking the national trend. Peter summarizes these developments thus: "The levers of medical care control are pretty well understood and can be applied with confidence. ... further improvements are incremental."

So what's next? Well, what is comp for, in the first place? Paying medical bills is really an incidental part of the process. Comp's primary task is restoring injured workers to full function and getting them back to life. That's even more true in our full employment economy, when every person lost to an at work injury is sorely missed and is probably not easily replaceable. Peter's conclusion: "The WCRI's primary constituents would welcome better understanding of return to work. That includes research into the determinants of successful and failed return to work."

Our prognostication is that getting better at RTW may well prove to be THE ISSUE of 2019. It speaks to the most pressing needs of both employers and injured employees. Neither party has much economic slack to work with. Employers need to get work done while the great majority of families need every paycheck. New ideas about reducing time loss are in the mix now. Examples include better use of cognitive behavioral therapy to help injured employees cope with the mental stresses of disability; the deployment of decision support systems to help adjusters spot problem claims sooner and bring in needed assistance; and greatly improved communication between all parties using new smartphone applications.

We think the big deal for this year is improving RTW so it facilitates rather than frustrates claimants and employers alike. Perhaps we should start by scuttling the phrase "return to work." How about return to life instead?

Quick Take 1:
So How Did _____ (fill in the blank) Do Forecasting Last Year?

The majority of swamis practicing in our industry quietly sidle away from last year's predictions while energetically promoting their insight for the coming year. Not the redoubtable Joe Paduda of Managed Care Matters. Late last month he posted, as he does every year, a scorecard for his 2018 predictions (see both here and here). Joe got seven out of ten pretty specific and wide-ranging predictions spot on. Next time anyone tries to tell you what's going to happen next year, ask them if they got 70% right on their last go around.

Quick Take 2:
You Think You've Got Risks?

The good folks at Argo Group, via Property Casualty 360, point out in a very recent posting that the jolly fat guy has one hell of a complicated risk problem, what with running a toy factory and world-wide delivery service. Does Lloyd's even have endorsements for flying reindeer? What about business interruption, given his pretty inflexible scheduling?

Seriously (sort of), thinking through Santa's risk profile is a pretty neat way of making certain you've covered all the angles in your own program. Christmas is a complicated business, just like your own. Like Santa, you may have a few pretty unusual risks to cover as well as the usual run of P&C exposures, not to mention a plethora of different jurisdictions to think about. And, of course, once we've covered all the external exposures, we get to that belly that shakes like a bowl full of jelly. What about wellness, Santa?