Marketplace Realities 2018: Workers compensation

November 6, 2017
  • We find that the U.S. workers compensation insurance market is somewhat insulated from global insurance rate trends. As such, we do not expect a general uplift in P&C rates resulting from the 2017 hurricanes to have much impact on U.S. workers compensation rates.
  • The one thing

    With the evolving legal lines between an employee and independent contractor creating unforeseen workers compensation liabilities, you need to stay abreast of these changes and diligently manage contractual relationships to ensure proper protection.
  • Medical costs continue to rise, with the Bureau of Labor Statistics advising that medical care costs have risen 3.2% in H1 2017 and are not projected to subside in H2 2017. This growth continues to outpace inflation.
  • The plaintiffs bar continues to successfully push regulatory reform in states that have contained attorney-fee caps by suggesting that these compensation limits violate constitutional rights. While Florida was the first to experience such reform, which ultimately resulted in an approved rate increase of 14.5%, states such as Alabama have followed suit.
  • The opioid epidemic has had material impact on health care, general liability and workers compensation lines of insurance. Business Insurance reports that 40% of all drug spending under workers compensation is on opioids. A recent Liberty Mutual study detailed the problems associated with cases where opioids are prescribed within 15 days following lower back injury. Data showed patients receiving opioids shortly after an injury, when compared to patients who received no early opioids, were:
    • Disabled an average of 69 days longer
    • Three times more likely to need surgery
    • Six times more likely to become dependent on opioids
  • Price prediction

    -2% to +2%
  • Medical marijuana has been proposed as an alternative for pain management, but as expected, this solution has been met with much opposition. From an insurance perspective, medical marijuana continues to challenge state workers compensation boards, as well as state judicial and legislative bodies, as they decide whether to permit reimbursement of medical marijuana as a compensable workers compensation benefit. On September 13, the Supreme Court of Maine heard arguments in Bourgoin v. Twin River Paper Co. The outcome of this case will decide whether medical marijuana will be reimbursed under Maine’s state workers compensation act. This ruling will likely influence the response of other states.