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Mark Sektnan, president of the Sacramento-based Association of California Insurance Companies, says a workers compensation prescription formulary approved in October will be an important tool in preventing unnecessary dispensing of narcotic painkillers to injured workers in the state. In an interview with Business Insurance Associate Editor Sheena Harrison, he also discussed how California's 2012 workers compensation reforms have played out and the significance of California lawsuits against “on-demand economy” companies. Edited excerpts follow.
Q: What are your thoughts on the new workers comp prescription drug formulary recently adopted in California? How will it help California employers and insurers with workers comp prescription drug management?
A: Experience in both Texas and Washington shows that a formulary is an important tool to ensure injured workers receive the appropriate medications. A formulary can also be helpful in addressing one of the biggest issues facing workers compensation, and society in general: the overprescribing of opioids. The California Division of Workers' Compensation has said that in the development of the formulary, the first element to consider is whether the drug is appropriate, and the second element would be to look at the cost. The formulary should be designed to provide the most appropriate medicine at the most efficient price.
Q: How closely are you watching the employee misclassification lawsuits that have been filed in California against companies such as Uber Technologies Inc., Lyft Inc. and Amazon.com Inc.? If such companies have to begin classifying their affiliates as employees, how would that affect the “sharing economy”?
A: We are watching these lawsuits very carefully. While the potential impact of having these individuals classified as employees may be significant, it is unclear what the impact would be on the overall sharing economy.
Q: How has S.B. 863 played out in California this year, and how will it affect the California comp system in 2016?
A: Recent studies, as well as California Insurance Commissioner Dave Jones' recent action to reduce the workers comp pure premium advisory rate for 2016, continue to show that S.B. 863 is continuing to save employers money. These trends should continue as the system gains experience with some of the reforms in S.B. 863. That includes independent bill review, which is just starting to be used.
Q: What other insurance industry issues will be in focus for California next year?
A: Plaintiffs' attorneys are going to continue to push for changes in the underinsured motorist statute and for increasing minimum financial responsibility limits for auto insurance. About 30% of California drivers purchase a minimum limits policy, so an increase in the limits will increase premiums for people least able to afford it, which could increase California's uninsured motorist rate.
Q: The California Workers' Compensation Insurance Rating Bureau says that workers comp claim frequency continues to rise in the Los Angeles basin, despite a downward trend in other areas of the state. Any thoughts on why?
A: The California Senate Labor and Industrial Relations Committee recently heard testimony that suggested costs may be higher in Los Angeles due to the ethnic makeup of the population, the differing workplaces of the L.A. economy and a higher involvement of applicant attorneys. The California Applicant Attorneys Association testified that the greater Los Angeles area is home to 7.8 million Latinos, many of whom work in higher risk jobs, such as construction, and suffer a disproportionate number of workplace injuries and deaths ... The greater Los Angeles area also generates over 86% of new liens filed in the last four years, according to the WCIRB. Attorneys are involved in over 58% of claims in Southern California vs. 41% of claims involving attorneys in the remainder of the state.
New York-based broker Integro Ltd. recently marked its 10th anniversary. Last month, it was acquired by Odyssey Investment Partners L.L.C. Presiding over these events was William Goldstein, president of Integro since 2014. In an interview with Business Insurance Senior Editor Mark A. Hofmann, Mr. Goldstein discussed what the Odyssey transaction means, Integro's acquisition philosophy and where the company sees growth opportunities. Edited excerpts follow.