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Q&A: Elizabeth Haar, Accident Fund Holdings Inc.

Q&A: Elizabeth Haar, Accident Fund Holdings Inc.

Elizabeth Haar is president and CEO of Lansing, Michigan-based workers compensation insurer Accident Fund Holdings Inc. and chairwoman of the National Council on Compensation Insurance Inc., a Boca Raton, Florida-based workers comp ratemaking agency. She recently spoke with Business Insurance Associate Editor Sheena Harrison about projections for the workers comp sector and developments in comp claims handling. Edited excerpts follow.

Q: How do you view the state of the workers comp market right now, and do you expect the recent market improvements to stick around for awhile?

A: I think that the overall state of the work comp market has been good, but I think there are some signs of some concerns in increased volatility on the horizon. I believe both NCCI and A.M. Best (Co. Inc.) are projecting that the combined ratio for work comp for 2014 was going to be either at or below 100%; and if that ends up being true, that would be probably the lowest combined ratio that the industry has had since around 2006. So all of that's really good.

We do think that we're going to start to see the combined ratio creep back up in 2015 and beyond as the market begins to soften again. But we also believe that while the combined ratios are probably going to rise, that many of the strategies that help make the industry profitable this last year are going to stick around. We think the industry has a significant increased use of data analytics. There's been an increased focus on improving medical outcomes. There's been a better understanding of the effects of opioids on injured workers. I think all of those things are favorable for the industry, and they're going to stick around, but we do believe that volatility is going to increase.

Q: What are some of the emerging issues that you believe will have an impact on the comp sector the next few years?

A: I personally think that the biggest impact on the comp sector right now is interest rates and the effect that interest rates have on investment results and underwriting targets for carriers. If you really go back historically, there's a lot of work comp carriers that were relatively happy to have some large losses on the underwriting side because their model was that they could make up for those large losses with large investment profits, and I just don't think that that model is going to work anymore. So work comp carriers really need to, I think, fundamentally change what they think their underwriting targets are in order to produce reasonable returns.

Q: What role has workplace safety played in the workers comp space right now and has there been a shift in how risk management and safety departments are working together for the employers that you insure?

A: Workplace safety used to be a lot about complying with (U.S. Occupational Safety and Health Administration) standards. Now, I think there is less of a focus on compliance and it's more of a collaboration between insurance carriers and employers to improve overall safety. Also, I think employers are starting to take the approach that improving the safety of their business can improve their business overall.

Q: What advances have you seen recently in workers comp, claims management and medical management?

A: There has been an increased focus on the outcomes of medical claims. I think the shift has been to not just look at transaction costs, but look at the overall quality of what is being done to improve the medical outcome. I also think there's a huge increase in the use of data and data analytics. I know that we have been using predictive models now in the claim space for a number of years, and for us that has been a very big benefit.

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