Innovation may often be considered an evolution that requires moving heaven and earth. However, sweeping changes may not be effective, especially when it involves stretching the boundaries of knowledge for a customer base. Many of the antiquated processes in workers’ compensation may require breaking barriers to build a successful system for the future.
“Technology transformation was one of our Out Front Ideas ‘Issues to Watch’ this year, said Mark Walls, Vice President, Client Engagement at Safety National. “The workers’ compensation industry has traditionally lagged in its use of technology, and there are tremendous opportunities to change that, whether that be in bill reviews, managed care opportunities, or data insights.”
Technology is coming in the form of enhancements outside of changing core programs, so carriers should start by thinking big but starting small.
What are the most significant roadblocks in the industry’s progress?
Workers’ compensation continues to be the most regulated line of insurance, from who is paid and when it is due to how it is done. This rigid framework, built around legacy claims, was intended to protect injured workers, but some of these decades-old regulations may be becoming detrimental. For example, certain states still require paper check payments, and some require claims regulators to operate only within that state, restricting available resources.
Additionally, most third-party administrators (TPAs) are critiqued on their financials quarterly, making it difficult to communicate to shareholders that current technology investments will be transformative. Still, it may take 10 years to see those results. Stakeholders tend to focus on the here and now, making a long-term roadmap challenging. Considering baby steps in the transformation can help translate this more effectively to stakeholders.
There is also a fear of failure for many. Empowering individuals to submit ideas is critical, but the stress of knowing it might not work can cause many to hold back. It can be hard to take a chance, but that is how you move forward.
What is going to shock the industry into changing?
Clients must demand change, but they may hesitate based on the potential risks involved, with fraud always being the most significant concern. However, solutions like automation in claims and bill reviews could alleviate issues around adjuster staffing. Technology is also evolving rapidly, changing the dynamic in the industry’s ability to train and reskill employees. This disruption could be necessary for evaluating how quickly solutions need to occur.
The pandemic also forced many small changes, like the adoption of electronic payments to injured employees. After Hurricane Katrina, there was an opportunity to use the disaster as a catalyst for change in the system, but there was still hesitation. Internal stakeholders may have concerns about increasing workloads, but it comes down to the right messaging. Buy-in can shift when users are re-educated on the value of these necessary enhancements.
How do we start this process?
Successful transformations start with knowing what current pain points exist. Based on this data, there may be a laundry list of projects, but chipping away at progress is still innovation. Stakeholders need people involved that can champion the value of these solutions and break it down into digestible parts. Quality data is also required to move the needle. Without it, we may be looking in the wrong place, and integrations need to be appropriate to be effective. Lastly, there is only urgency in innovation with client demand. Changes may make the system more effective and profitable, but many will not deem it a priority without demand.
Want to learn more about industry innovations? Don’t miss Out Front Ideas presenting Technology Transformations during WCI’s Industry Keynote on Monday, August 21, 2023.