The use of tech within this insurance space is making positive changes to the market, says a new report.
Workers compensation technology is proving exceptionally advantageous to the insurance market in terms of positive and sizeable changes, said an expert’s report. The tech is promoting reduced claims frequency, which is sending rates downward.
The fewer the claims insurance companies receive, the less they must often charge for coverage.
“We think it’s due to insurance companies doing better on the claims of their policyholders by using technology to drive down the number and severity of those claims,” said All Risk vice president of workers compensation, and accident and health, Jim Mitchell, in an insurancebusinessmag.com report.
“Just in the last 12 months, for example, we’re seeing that insureds are using mobile apps now to track their claims activity, which we hadn’t seen previously. They’re also reducing claims by using wearables, so now you’ve got employers that are able to track exactly what their employees are doing throughout the day and how they’re doing it to better identify loss trends.”
Reports are coming in from insurers and brokers about the difference workers compensation technology makes.
NFP, an insurance broker, also said it has seen a reduction in its workers compensation claim frequency. That said, it did underscore that its experts are watching the severity trends. As much as a reduction in the number of claims can help to keep costs down so that rates can drop, it is not the only factor. If claim severity rises, each claim can become more costly and offset the reduction in frequency.
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Other factors worth considering include the state in which the workers compensation coverage is sold. For instance, New York state is typically considered to be a challenging one for workers compensation.
Vice president of NFP, Sebastian DiBella, who is responsible for risk management group oversight, explained that many workers’ comp claims continue to be filed in New York. That said, he also pointed out that in October 2018, the state passed a milestone of about 11.7 percent in loss costs reductions. Since carriers use those figures to set their rates, this shows potential for possible rate reductions in the future.
Still, the higher benefits levels are making insurers cautious about reducing rates despite the benefits of workers compensation technology in New York.