Let’s dive into Workers’ Compensation. This can be a huge impact on your business. While other lines of Property Casualty coverage have seen rate increases, experts continue to predict that rates will remain stable with some rate decreases and others may have minimal increases.
While this is great news, there are a few things to be aware of. There is no doubt that there is an increase of widespread labor shortage, an increase in claims, and medical inflation. These are some of the areas causing pressure to the work comp rate.
Widespread Labor Shortages
The U.S. Bureau of Labor Statistics confirmed there were more job openings available in 2021 than in the previous 20 years. Some economists are predicting the labor shortage to continue as the pandemic influenced many baby boomers to retire early.
Unfortunately because of these shortages most companies have had to turn to inexperienced workers and have had to provide much more training on the job. Some companies have even had to reduce their hiring requirements. Due to this, these areas come with more work comp risks.
It’s not a secret, that more of the work comp claims come from those individuals with less experience on the job. It’s very important to focus on job training to ensure your employees are being safe and performing work as they should. Another area to be aware of is the extra training and help needed from current employees. They may be doing more work and working overtime to help out these less experienced workers leading to burn out and increased claims.
Increase in Mega Claims
A mega claim is known as a very large insurance claim over $3 million in incurred losses. In the scope of work comp, these claims typically come from employees experiencing severe or sometimes permanent injuries on the job. More recently, these claims have increased in both severity and frequency over the last couple of years.
Inflation is something you should be aware of and understand how it affects your business. Here is one thing you need to be aware of in future strategies – the highest correlation between Consumer Price Index (CPI) and medical trend indicates a 2 year lag. The CPI is seeing a large spike with inflation. You might be able to predict increases in the 2023 and 2024 medical trend.
Combating Workers’ Compensation Issues
It’s important to note these future trends, but there are things your business can do to prepare for this. No loss is the absolute best trend. Some include solid training for employees, strong hiring practices, provide newest tools and technology, and increase the focus around safety culture and practices. These are just a few ways you can combat workers’ compensation issues for now and into the future.
Our team here at IBC Insurance is ready to help you keep your workplace safe and help you to reduce loss. Give us a call today at 712-277-2424 or fill out this form online.