WHAT WAS THE IMPACT OF THE COVID PANDEMIC ON THE WORKERS’ COMPENSATION INSURANCE INDUSTRY?  At the first onset of the Covid Pandemic, there were predictions of over $100 Billion in insurance losses, with the Workers’ Compensation Industry expecting to have $90 Billion of those losses. The pandemic actually resulted in losses of about $1 Billion, with Commercial Property Insurance being the most affected, and litigated. The actual data per NCCI (National Council on Compensation Insurance) shows that the aggregate underwriting performance for Worker’s Compensation in 2020 was relatively the same as in 2019, and 2021. The industry has been resilient, and insurers were able to manage through the pandemic.

THERE IS GENERAL CONCERN ABOUT THE ECONOMY SINCE THE PANDEMIC: Since the pandemic, there has been accelerated inflation, which has caused a lot of anxiety for people. Medical inflation continues to pick up, largely due to an increased demand for healthcare workers, and overall costs for healthcare. Many of those healthcare costs are related to technology, and costs of treatments. It is expected that these should start to equalize sometime next year.   

WE ARE NOT IN A RECESSION: Several media outlets have compared today’s inflation with the inflation from the 80s, and have repeatedly stated that we are headed for a recession. The inflation from the past was much worse than today’s inflation, due to extremely high-interest rates, along with extremely high unemployment. The labor market is strong today, and unemployment is not expected to rise above 4%. In order for there to be a recession, there would need to be high inflation, along with high unemployment rates. The environment right now does not support a long-term inflation outlook, and it will eventually start to revert back to the mean. Interest rates should peak by the first quarter of next year, and hold briefly. They should start to move downward by the second half of 2023. They will not be as low as they were pre-Covid, but they will get lower. It is not as dim as people think it is.

THE ROAD AHEAD IN WORKER’S COMP INSURANCE LOOKS OPTIMISTIC: The workplace now is much safer than it was in the 50s. There was a much higher chance back then of getting hurt or dying in a workplace. A lot of this is due to workers’ comp insurers, and risk management strategies. Large corporations have made considerable investments in work safety. The investments are paying off, and the frequency of injuries is much lower. Prevention, and innovation, are crucial to risk management. Technological advancements such as sensors, that can tell if a worker is lifting incorrectly, or is at risk for heat stroke will be game changers.  If a company is casual about injuries, it will regret it later on.  

THE WORKERS’ COMP INDUSTRY NEEDS TO WORK ON FILLING THE TALENT GAP: Due to upcoming retirements, and “The Great Reshuffle,” it is critical to find the right talent in the industry. In order to attract college students, who will be graduating in the near future, companies need to have strong internships. Students who have a positive internship experience will likely sign on after graduation. Start recruiting early, because the biggest competition for students is banks and consulting firms. Recruit students with a wide variety of degrees; not just economics and finance students. Start by working with colleges to allow your employees to come and speak with students. This will give your organization a leg up in the process. It is important to send employees from your company that is relatable to the upcoming graduates. It has never been a better time than it is now to consider a career in workers’ comp insurance. There are several different career opportunities within the industry, and most important, it is an extremely resilient industry.