In recent years, the U.S. has seen pretty flat loss costs within workers’ compensation premiums and even a slight decline in claims costs. For the time being, this has meant lower premiums for your clients. But a recent study predicts that will soon change.
A Hartford, Connecticut-based investment firm released a report last year that showed a few reasons why workers’ compensation underwriters can expect to see loss costs increase—and why your clients may see workers’ comp insurance premiums rise.
- More accidents. As the country’s economy has improved, many construction, transportation, and manufacturing jobs have hired additional workers to meet the industry’s rising demands. However, this means many of the new hires are also new to the field, creating an overall less-experienced workforce, which leads to more accidents. Additionally, older employees are continuing to stay at work rather than retiring, which has led to an increase in accidents of those ages 65 and up.
- Worse accidents. According to the Bureau of Labor Statistics, construction fatalities rose 6% from 2013 to 2015, and manufacturing fatalities rose 9% from 2013 to 2014. The costs associated with serious accidents and fatalities also continue to rise, as hospital and drug prices are currently increasing faster than inflation.
- Cost-shifting is more prevalent. Cost-shifting is a way hospitals cover the losses from treating patients without insurance by charging those who are insured more money for the same procedures. Since those providers can charge more under the workers’ compensation system than in certain group health contracts (particularly those covered by social security or the Affordable Care Act), they shift the cost accordingly and pass it on to the employers.
Although it may appear that rising costs are imminent, there are still ways to help your clients combat these trends. Your expertise in safety and claims prevention can help clients lower overall costs, even while premiums continue to rise. For example, clients should understand that partnering with an experienced agent leads to:
- Better risk management
- More comprehensive safety and training programs
- Help in screening candidates and new hires
- Efficient and speedy claims process
- Proven return-to-work program
More accidents with more severe injuries may be the national trend, but with more prevention, better preparation, and quicker action, your clients can still be on the winning side of workers’ comp statistics.