Adaptability key as changes loom for workers comp sectorReprints
ORLANDO, Fla. — Changes in the workers compensation industry are happening faster than ever, and stakeholders must learn to adapt in order to remain relevant, according to the head of the National Council on Compensation Insurance Inc.
That is why Bill Donnell, president and CEO of the Boca Raton, Florida-based NCCI, introduced “adapting” as the word and theme of the organization’s Annual Issues Symposium being held this week in Orlando, Florida.
Mr. Donnell noted during his opening speech Thursday that the workers comp industry was born out of a necessity to protect and care for employees and their families as well as insulate employers more than a century ago, and it has remained successful at doing so for more than 100 years.
But, he asked, is the industry still relevant in 2017?
“Companies or industries that don’t stay relevant go out of business,” said Mr. Donnell, illustrating the point with the example of Blockbuster L.L.C., the bricks-and-mortar video rental service that filed for bankruptcy 10 years after turning down the opportunity to purchase the now-thriving internet-based Netflix Inc.
The industry has experienced a “good ride” in the past four years, benefitting from job growth that has expanded workers compensation insurers’ net written premium as the economy continues its post-recession recovery, he said. The comp industry now covers about 95% of the 124 million U.S. workers and the industry can take some credit for improvements in workplace safety that have led to a 50% decrease in claims frequency during the past two decades, Mr. Donnell said.
But the industry should be careful not to become complacent or overconfident, he said.
“We work in cyclical industry, and history tends to repeat itself.,” Mr. Donnell told attendees.
The industry has proven that it can weather change and remain relevant, including the evolution during the past century and a half from a workforce that was primarily engaged in agriculture during the 19th century, to a manufacturing-focused workforce in the 20th century, to a workforce today that is dominated by service occupations.
That workforce mix could be preparing to shift again as technology, robots and other forms of artificial intelligence supplant some of those service jobs, observers say.
Remaining open to new ideas and technology advances will be crucial for industry stakeholders to adapt to change and remain relevant, Mr. Donnell told Business Insurance in an interview Thursday. Among the changes he expects industry stakeholders will have to face are increased competitive behavior, the evolution of back-office processes facilitated by technology, the influence of wearables on worker safety, the ability of big data to improve claims outcomes and the use of predictive analytics to accurately price risk.
“We are a very big ship that tends to turn slowly,” he said. “We can’t stay stagnant. The world is changing fast, and we have to adapt with it.”