Topics: Industry News Workers' Compensation
Increased regulation, legislative changes, and a changing workforce are all factors influencing the workers’ compensation insurance industry outlook for 2017 and beyond, according to 2017 State of the Line Guide from the National Council on Compensation Insurance (NCCI).
The US, as a whole, saw a 2.4% rise in direct written premium volume from 2015 to 2016, which could be due to the 4.5% increase in payroll spend across the country, the 2.5% wage increase, and the 1.9% increase in employment.
As a whole, the workers’ compensation industry is making significant gains. In the 2016 calendar year, the combined ratio for private carriers was 94% (for the second year in a row according to the NCCI). In fact, the industry combined ratio hasn’t been this low over consecutive years in the past 30 years.
According to the former President and CEO of NCCI, Steve Klingel, the future of workers’ compensation has a positive outlook, but it’s not without bumps in the road ahead. Several factors that could affect the small business insurance industry could bring difficulties. With a changing workforce, an unclear future for healthcare in the US, and legislative changes unknown, the entire workers’ compensation system could change in an instant.
Since the last recession, manufacturing and construction employment rates have drastically increased, and the rates in the medical and technology industries are rising faster than ever. With more Americans getting back to work, the workers’ compensation industry as a whole faces significant changes in the near future.
The internet and technology have made remote workers, consultants, and independent contractors more common throughout the United States, which could make it challenging for small business insurance agents to find the right multiline policy for their clients.
During the Obama administration, the Department of Labor was strict on employers who misclassified workers for the sake of saving on workers’ compensation premiums. David Weil, the former head of the Labor Department’s Wage and Hour Division under President Obama, explained that misclassification creates “an uneven playing field for employers who properly classify workers” because misclassifying workers as independent contractors versus employees denies those workers healthcare and other full-time employee benefits.
The future and severity of enforcement under the Trump administration is one of many unknowns the insurance industry is currently facing. But, regardless of the federal government’s actions, AmTrust Financial Services is working hard to stay ahead of industry trends and fluctuations.
Matt Zender, Vice President of Workers’ Compensation for AmTrust, is looking ahead to a bright future for small business agents. He says that a recovering economy and workplace changes may lead to a shift in the industry, and that close attention and analysis are the key to adapting to the changing market.
According to Zender, AmTrust is “committed to using the best analytical tools and technological minds to do the work necessary to help protect and support policyholders so that they can be proactive, and provide them with the best products available in the midst of an evolving industry.” AmTrust North America is the 3rd largest provider of workers’ compensation insurance products for small businesses in the United States.
Wage and Hour Division Administrator Interpretation – Fair Labor Standards Act No. 2015-1 (withdrawn June 7, 2017)