Other parts of this series:
In my first post in this series, I outlined how workplace injuries cost companies and their workers’ compensation insurers billions of dollars each year and proposed that analytics tools and a new generation of wearables could help bring down the costs and risks of workplace injuries.
In this post, I’ll look at why workers’ comp insurers should look to innovation and technology to prepare for headwinds the industry may face in the years to come. Workers’ comp insurers currently lag life and personal lines auto insurers with regard to the effective exploitation of technologies such as Internet of Things devices for risk engineering and mitigation.
They continue to rely on worker job codes and other static criteria to assess injury risks and to price policies. This might not be enough to ensure growth and competitiveness in the future. The sector—the largest segment of the US commercial insurance market—remains profitable, but workers’ comp insurers cannot afford to be complacent.
According to a report from Moody’s Investors Service, the US workers’ comp sector has improved significantly since 2011 as the domestic economy has strengthened and as the labor market has grown. But Moody’s warns that rising competition could lead to margin compression in the years to come.
What’s more, labor shortages and an ageing workforce could result in the recruitment of a less qualified and trained industrial workforce, and hence, the risk of higher benefit payments. Older workers, who are at higher risk of many classes of injury than younger workers, may also be encouraged to postpone retirement.
Dr. Richard Victor, the former CEO of the Workers’ Compensation Research Institute and current senior fellow at the Sedgwick Institute, forecasts a 55 percent increase in the number of workers’ comp claims by 2030. This could see the costs (including inflation) of workers’ comp triple in the same timeframe.
With challenges rising for workers’ comp insurers and industrial organizations alike, an episodic approach to evaluating workers’ risk of injury is not sufficient. Leading organizations should be looking at how they can leverage the Internet of Things and analytics tools for continuous monitoring of workplace injury and productivity risks.
The advent of platforms such as StrongArm Technologies’ FUSE Risk Management Platform promises a similar revolution in the monitoring of worker health and safety to how the industrial Internet of Things has transformed management of industrial assets, or how fitness wearables have changed the way many people approach health and fitness.
Such solutions can help to vastly reduce injuries, bringing benefits to workers’ compensation insurers and their clients alike.
My final post will wrap up by looking at how workers’ comp insurers can use wearables and data to offer more value and understand risks better than ever before.
Read the Accenture/StrongArm white paper to find out more.