The Workers’ Compensation industry had another positive year in 2017, posting solid financials and consistent underwriting gains. In fact, the sector has recorded improving results for the last seven years.

Key indicators trending favorably include positive combined ratio development, an increase in pre-tax operating gains and a continued decline in both lost-time claim frequency and reserve deficiencies:

• 89% combined ratio for private carriers on a calendar-year basis (99% on accident year)
• 2017 total net written premium slightly decreased from $40.1 billion to $39.8 billion
• Investment gain of 12%, a slight increase over prior year
• 6% in lost-time claim frequency, continuing a downward trend
• 4% increase in medical severity
• $1 billion estimated WC reserve deficiency ($4 billion lower than last year)

Source: 2018 NCCI AIS

But it’s not a time for Workers’ Comp carriers to rest on their laurels. That was the message we heard from National Council on Compensation Insurance (NCCI) CEO Bill Donnell, speaking at the association’s recent Annual Issues Symposium.

Mr. Donnell believes that the industry must work harder at “connecting to its future,” especially with regard to the impact of automation and technology on the nature of work, the worker and the workplace. It sounds daunting, but he believes the insurance industry is well-equipped and conditioned to handle the changes coming down the line.

In a sense, insurers don’t have a choice. One study indicated that up to 60 million U.S. jobs will be significantly impacted by the adoption of automation over the next 10 years.

However, watch for speed bumps on the road to automation. As Mr. Donnell pointed out, business owners will not invest in technology unless it has clear benefits. Plus, there are significant regulatory complexities that tend to slow the process.

But the future economy is in the hands of millennials - the most educated, diverse and tech-savvy generation ever. Not only will millennials be future employees, but future business owners and employers as well. As such, this generation will be the pioneers of the new technology-infused landscape - a challenge for which they’re equipped.

If worker demographics are changing, so is the workplace. Mr. Donnell shared an optimistic vision of the future, saying that advancements - such as the use of robotics and wearable technology - will add to existing safety improvements. Better monitoring of conditions, increased connection with workers, and increased leveraging of data analytics will promote the development of tools that help employers understand and mitigate risk.

Businesses will make greater use of online conferencing, telemedicine and virtual reality. Telecommuting has already grown by 100% over the past 10 years, and it is projected that over the next several years more than 50% of workers could be working remotely in some way. As Mr. Donnell concluded, “But success will also be measured by how we embrace technology to deliver our services and positively impact workplace safety and return-to-work efforts.” Clearly, the Workers’ Comp industry must continue to transform and adapt to stay relevant in this fast-changing world.