Mark Walls, Safety National’s Vice President of Client Engagement, joined forces with Kimberly George, Sedgwick’s Global Head of Innovation and Product Development, to identify 20 critical workers’ compensation trends that should be on everyone’s radar for 2022.
In part one of our coverage, we break down the first 10 major issues that every risk manager and insurance professional should monitor.
1. Vaccine Mandates
Large employers have finally received some clarity on vaccine mandates after the Supreme Court’s recent ruling blocked the Biden administration from enforcing a vaccine-or-testing mandate for organizations with over 100 employees. Alternatively, SCOTUS allowed the Centers for Medicare & Medicaid Services (CMS) vaccine mandate to go into effect, impacting all healthcare workers at CMS-funded providers.
2. 2022 Elections
With 36 gubernatorial seats on the ballot this year and insurance regulated at the state level, carriers will need to pay special attention to appointed regulators, administrative law judges, and insurance department priorities.
3. Talent Challenges
Upskilling and reskilling the workforce to prepare a new generation of claims and risk professionals is more necessary than ever with mass retirements. Organizations committed to recruiting efforts have found success when a stronger emphasis is placed on environmental, social, governance (ESG), diversity, equity and inclusion (DEI), and employee resource groups (ERGs).
4. Environmental, Social, Governance (ESG)
ESG has become a standard method for evaluating how companies manage various social and environmental issues. In the insurance industry, certain state regulators are implementing ESG standards as a requirement for doing business in that state, which has proved challenging for those in business with legal sectors, such as coal.
5. Technology and Data
Many companies are focusing on digital strategy and data science as crucial components of their value story that transcend the expectations of customers and employees. Data continues to be a key business asset, and it is no longer the size of the dataset providing the most significant value. Instead, the value lies in how an organization uses data to create new models, automation solutions, improve the underwriting process, and support a risk manager’s awareness of trends and opportunities.
6. COVID-19 Continued
For the insurance industry, the pandemic now represents the third-largest loss from any catastrophe after Hurricane Katrina and the 9/11 terrorist attacks. There is significant ongoing litigation over COVID-19 coverage, especially regarding business interruption under property insurance and event cancellation coverage. There is also concern about the potential for long-term symptoms from COVID-19 and how that could impact workers’ compensation.
7. Economic Impact
With rising prices, significant inflation is expected in the first half of 2022 due to ongoing supply chain concerns and a worker shortage. While it is predicted to recede mid-year, the National Institute of Economic and Social Research predicts the inflation rate will fall to 2.3% by the fourth quarter. By all accounts, 2022 should see economic growth of around 3.9%. Overall, the gross domestic product is expected to grow by nearly 3% in 2022, which is much slower than last year.
8. Independent Contractors vs. Employees
An essential element of workers’ compensation is determining whether a worker is considered an employee or an independent contractor. Unfortunately, this issue has become more complicated with different payroll regulations and varying state legislation. Carriers only seek transparency in contracts. While policyholders may abide by every regulation, this issue creates a potential for worker misclassification, the leading source of workers’ compensation fraud.
9. Expansion of Mental Health Access
Mental health care is vital, and millions of Americans face a crisis care shortage. 19.86% of adults are experiencing a mental illness, equivalent to 50 million Americans, with 4.91% experiencing a severe mental illness. In November, the Compacts, Access and Responsible Expansion (CARE) Act was introduced to reform medical licensure to expand interstate access to mental health resources, which is desperately needed to ensure a better supply of mental health providers available. Virtual mental health, telepsychiatry and teletherapy will continue to grow this year. This treatment can remove barriers, like time away from work or family or the potential stigma that some still feel.
10. PTSD and Presumptions
Presumptions now cover many common diseases, including cancer and heart disease, dramatically increasing the workers’ compensation costs for public entities. The most recent presumption trend legislation involves post-traumatic stress disorder (PTSD). These laws can create a presumption often without following long-established diagnosis and treatment guidelines, which significantly impacts municipalities’ budgets and staffing for law enforcement agencies.
For part II of our Issues to Watch coverage, click here.