Facing the Insurance Quality Content Dilemma (Part 1)

CC0 Public Domain

CC0 Public Domain

Insurance marketing and communications executives face a Hobbesian choice when looking for public relations and marketing services. They can either rely on agency counterparts who do not deeply understand the intricacies of insurance or internal subject matter experts who know insurance but are not professional communicators.

The dilemma is the direct result of two primary factors. First, there are few professionals who offer insurance expertise and possess audience-focused communications training and experience.

Second, effective marketing heavily relies on producing magnetic and substantive content. Amidst intensifying online competition, the C-Suite asks their internal marketing and communications departments to become publishers of brand journalism without the additional resources to support the effort.

Often, the C-Suite commonly does not want to accept that publishing is expensive. But it is, which is why so many newspapers and magazines, even those offered online, no longer exist. In a world of free content as a marketing approach, there is no option to sell advertising to underwrite the expense of professional communicators.
Without understanding the audience,
inbound marketing will fail.

Those who appreciate and understand insurance tend to be professionals whose aspirations didn’t include becoming writers. Experts in claims management, underwriting, risk management, actuarial, statistics and other disciplines often despise writing. They began their careers not knowing that branding and digital marketing would introduce the publish-or-perish mentality that academics have struggled with for decades.

Such professionals are being asked to work beyond their skill sets while trying to maintain their core competencies through endless hours of continuing education. So it is not surprising that producing content by writing white papers or blogs becomes a hassle amidst their already busy days.

These experts find the writing process to be quite frustrating. After staring at a blank screen for seemingly hours their material is often unorganized or too complicated, making it difficult to read and understand. As a result, the marketing and communications department must invest in heavy editing and re-writing. It’s a time consuming and difficult process that can breed resentment on both sides.

Further, this approach is likely more expensive. Asking highly-paid professionals to write diverts their time and focus away from meeting client needs or rainmaking. Unfortunately, the C-Suite often does not take all these factors into consideration.

Lacking Insurance Expertise

The other option is to hire public relations, marketing and other communications firms. Usually, these well-intentioned companies lack deep and thorough insurance expertise.

The reality is that it takes years to understand the nuances of insurance. The industry not only has several disciplines, but several functions and a multitude of insurance lines.

Workers’ compensation, for example, involves understanding different subjects including health care, the claims process, return-to-work and disability coverage. Additionally, each state has its own regulations and expectations. Personal auto, the largest property/casualty insurance line, focuses on consumers so the approach is different compared to commercial lines such as general liability or business interruption coverage.

Further, the traditional insurance paradigm is evolving to a data and analytics model. Insurance executives, who tend to be conservative in nature, are still learning to maximize predictive modeling so it extends beyond underwriting and pricing to addresses claims management practices and marketing techniques. Forward-moving insurers are focusing on obtaining business intelligence through predictive modeling, which is quite difficult to understand without insurance expertise.

Other disruptors, including artificial intelligence, changing regulations and policy sales via Internet are also having a great impact on insurance companies and the vendors that serve them. Vendors that want to expand into the insurance industry also struggle with understanding what insurers really need, industry nomenclature or the right point person to contact.

Meanwhile, each insurance line faces its own struggles. Auto insurers are excited about telematics when a great deal of consumers want to maintain privacy. Then there are “preoccupiers” such as Uber and Lyft and driverless cars.

…the C-Suite commonly does not want to accept
that publishing is expensive.

Then there is the problem of truly understanding the needs of each customer type. Insurers are vying for a greater piece of the growing demand for cyber coverage, for example, when policies are inconsistent and buyers – and even their agents – are struggling to know what should be included in their coverage. The market potential for cyber insurance is enormous, but developing the right policy per each specific customer profile remains a challenge.

For business insurance, a smaller company that lacks a risk manager or a really awesome agent or broker will purchase based on price. Larger companies see the value of services and are sophisticated enough to know that price is just one part of the equation. They want to know how an insurer’s services will support risk management, claims processing and other areas. They also need to be sold on the technology designed to better serve them.

Another limitation is that marketing companies often approach digital marketing from a business school rather than a journalism school approach. They lack professionals who understand how to effectively produce materials because they are not trained in first rule of journalism, which is to understand the audience. I often encounter companies that do not want to invest in determining customer needs and pain points. Without understanding the audience, inbound marketing will fail.

So what is the solution? I’ll address this in my next blog. You can follow it by pressing the follow button on the left hand side.

In the meantime, please offer your comments below.



ACA Could Shift Millions of Dollars to Workers’ Comp, WCRI Finds

imagesIt’s been a question in CompLand ever since President Obama introduced the Affordable Care Act (ACA) in 2009. Would the law, enacted in 2010, lead to case shifting from health insurance to workers’ compensation?

Case shifting is nothing new. It often arises from gray area claims where the cause of injury might be related to work. An insurance entity does not want to pay bills that another should be paying so naturally, there has been effort to reduce case shifting.

But the ACA puts a new wrinkle on case shifting by encouraging Accountable Care Organizations (ACO) to adopt the age-old managed care capitated spending approach to reduce costs. Understand that this approach puts a lid on annual medical care spending per person (insured). Workers’ compensation, however, provides first dollar coverage, pays on a per-visit basis and limits medical spending by necessity.

Naturally, doctors don’t want to make less money, especially given other pressures such as reductions in Medicare payments. Critics don’t like it either, especially for workers’ compensation, because it can adversely affect quality of care and recovery, which can unnecessarily elongate payment of wage replacement benefits.

So the question is, if you were a medical provider with a “gray area” patient diagnosis, would you rather bill an Obama Care ACO or workers’ comp?

It appears that there is a greater likelihood of filing the patient’s claim under workers’ comp, according to evidence in the Workers Compensation Research Institute’s (WCRI) study, Will the Affordable Care Act Shift Claims to Workers’ Compensation Payors? As a result, hundreds of millions of dollars could be shifted to workers’ comp.

“It appears that there is a greater likelihood of filing the patient’s claim
under workers’ comp.”

Specifically, the study found that a back injury was 30 percent more likely to be called “work-related” in a state where the patient’s group health insurance was capitated rather than fee for service, according to a WCRI news release issued today.

In fact, the study found, case shifting was “more likely in states where a higher percentage of workers were covered by capitated group health plans,” the release said. In one state where at least 22 percent of workers had capitated group health plans, the odds of a soft tissue case being work-related was 31 percent higher.

In comparison to states where capitation was less common, there was no evidence of case shifting. “It also appears that when capitation was infrequent, the providers were less aware of the financial incentives,” the release said.

I always find WCRI’s research to be top notch. If you are concerned about workers’ compensation medical spending, you should check out their site at www.wcrinet.org.

Workers’ Comp Costs Slowly Rising

By warszawianka via openclipart.org

By warszawianka via openclipart.org

Workers’ compensation costs are slowly rising, according to the most recent Workers’ Compensation Resources Research Report (WCRRR).

The cost of workers’ compensation per $100 of payroll is $1.32 for 2012, the most recent numbers available, up from the historical low of $1.25 in 2010, according to issue 9 of the report released Wednesday.

While there are several ways to measure workers’ compensation costs, cost per $100 of payroll is my favorite because it gives a direct measure of average costs without entanglements such as the insurance market. It also takes account that wages have increased much more rapidly than employer expenditures on WC.

(John Burton, publisher of WCRRR, actually saved this information from extinction by encouraging the National Academy of Social Insurance [NASI] to take over the task in the late 1990s.) NASI released these figures last August

Employers are forever complaining about the costs of workers’ compensation. But the truth is, WC is far less expensive than it used to be. When I began writing about workers’ compensation in 1990, the cost of workers’ compensation per $100 of payroll was the highest in history at $2.18, which means the cost now is $0.76 less than 25 years ago.


Employers are forever complaining about the costs of workers’ compensation.
But …WC is far less expensive than it used to be.

Burton has been actively engaged in the workers’ comp system before I was born. He might be best known for being the chairman of the only National Commission on State Workmen’s Compensation Laws this nation ever had, which stemmed from the Occupational Safety and Health Act of 1970.

Historical Perspective

Insurance advocates have long argued that workers’ compensation costs rose beginning in the 1970s because of the higher benefit costs recommended by the National Commission. Rising benefits, along with massive system inefficiencies, rising medical costs and other factors, led to rising workers’ comp costs in the mid 1980s.

By 1990, employers, who in most cases are required to provide workers’ comp coverage to its employees, were clamoring for relief. This lead to significant changes.

From a legislative perspective, employers and insurer advocates did contain benefit costs by curbing maximum weekly benefits. As shown in the report, cash plus medical benefit costs were $ 0.98 per $100 of payroll in 2012, which is only two cents more than 1980, when it was $0.96. Reform also curbed allowable benefits for permanent partial disability and other types of cash benefits.

The changes in state programs also narrowed the definition of what types of injuries; illnesses and deaths were compensable, which Burton covers at length in the report.

Narrowing compensability does lower costs, but because it also removes the non-fault premise of workers’ comp from some work-related incidents, it’s potentially dangerous. From the employer’s point of view, the whole point of workers’ compensation, as Burton also describes in his report, was to remove such cases out of the tort system. Without workers’ compensation protection, employers risk lawsuits that are much easier to file than in the early 1900s and before.

Turning the attention back to the overall cost of workers’ comp per payroll, it is important to note that legislative action alone does not fully explain why workers’ compensation has become less expensive.

Before the workers’ comp crisis that began in the late 1980s, employers viewed paying premiums as a cost of doing business. Once it got expensive, employers had the incentive to become more educated on how to save workers’ comp dollars and ultimately take better care of their employees.


The employer-employee relationship has a greater impact
on a workers’ compensation claim than anything else.

I clearly remember those “ah ha” moments when employers realized their actions could lower WC costs. Enough employers “got religion” on accident prevention, safety, improving the claims process, rehabilitation and return to work that overall costs began to decline. What was considered innovative in the 1990s has become best practice.

The financial incentive to contain workers’ compensation costs also led to greater research on several topics from workplace safety to return to work outcomes and claim process inefficiencies. As a result, those involved in workers’ comp are more enlightened than ever.

That is not to say that workers’ comp is free from complication. The system is still beset by its political twists and turns, court decisions and other factors.

And while there are so many stakeholders in comp ranging from medical providers to insurers, lawyers, unions and regulators, one simple truth remains. The employer-employee relationship has a greater impact on a workers’ compensation claim than anything else. Many injured workers still suffer from uncaring employers just as employers see injured workers who are just not motivated to return to work.

Burton’s report also covers other important inflation, including WC coverage issues. To get your hands on the report, simply fill out an order form at www.workerscompresources.com. PDF downloads cost $20 and printed versions are $25.

To see more workers’ compensation blogs, click here.

Look Out for Workers’ Comp “Black Swans”

By Robert J. Malooly

When early cartographers reached the boundaries of charted territories on their maps, they often inscribed “Here be dragons” into the blank spaces beyond.

This fanciful warning warned travelers to prepare for previously undocumented or even imagined dangers. Whether from uncharted reefs or mythical beasts, failing to take unknown hazards seriously could result in an unprofitable voyage, not to mention the loss of ships and their crews.

Public domain courtesy of Arpingstone

Public domain courtesy of Arpingstone

While GPS satellites have filled in the blank spaces on maps, the unknown continues to plague today’s investors and workers’ compensation. Yesteryear’s dragons have been replaced by another rare bird – the “Black Swan” as defined by Nassim Nicholas Taleb in his 2001 book, Fooled by Randomness. Today the label describes a perceived impossibility that later is proven to be an unanticipated reality.

In business, Black Swans tend to be outlier events that fall off the radar of regular expectations because nothing in the past can convincingly point to their possibility. But once encountered, they can have an extreme impact. “Black Swan logic,” Taleb told the New York Times, “makes what you don’t know far more relevant than what you do know.”

Workers’ compensation faces a future filled with Black Swans that will affect the outcome of ratings, premiums and financial results for both insured and self-insured organizations.

One example of a workers’ comp Black Swan is physician dispensing of medication that is usually more expensive than pharmacy prices. According to the PMSI website, “…physician dispensing began to surface in California in the middle of the last decade, as physicians… found a secondary stream of income to fill gaps created by reimbursement cuts in the commercial, workers’ compensation and government markets.”

Beginning as isolated instances, this Black Swan is a workers’ comp reality that will continue to affect the health of workers and the bottom line of their employers for the foreseeable future. A Workers Compensation Research Institute (WCRI) study in 2012, Physician Dispensing in Workers’ Compensation, documented its rapid growth. A more recent WCRI study, Are Physician Dispensing Reforms Sustainable?, indicates that physicians are now countering reform efforts by finding loopholes that allow them to continue the practice of dispensing drugs at high prices.

Workers’ compensation faces a future filled with Black Swans
that will affect the outcome of ratings,
premiums and financial results
for both insured and self-insured organizations.

What other Black Swans may soon have an effect on workers’ compensation? MarketWatch predicts that 3D printing technology in healthcare will be a $1.2 billion market by 2020. According to its recent article, “3D printing has numerous applications in healthcare and can be segmented into implants & prosthetics, surgical guides, hearing aids, and tissue engineering.” This advancement alone will have a significant impact on workers’ comp disability ratings.

Many more Black Swans will come from out of the blue to impact workers’ compensation. But by their very nature, they will not be noticed until they begin to have practical applications and slowly affect insurance companies, doctors, employers and workers. According to Taleb, the danger lurks in the third element of Black Swans – the need for human nature to concoct, after the fact, explanations that make them appear less random than they were.

The inference is that if we had looked harder, the Black Swan would have been revealed. In the same New York Times article mentioned above, Taleb points out the risks in this practice, “Black Swans being unpredictable, we need to adjust to their existence (rather than naively predicting them).”

Awareness of potential workers’ comp Black Swans is critical. Those involved in workers’ comp should be mindful of the Black Swan theory, watch the horizon carefully for signs of a new brood hatching and conduct future scenario planning to anticipate and measure their impact early on. Whether this leads to actions designed to mitigate new risks or being the first to leverage new technology, an extra measure of vigilance will pay dividends to both the health of workers and the corporate bottom line.

Robert J. Malooly is CEO of Claim-Maps an Olympia, Washington-based organization dedicated to making adjusters heroes, giving injured workers the best possible outcome, and providing cost savings to self-insured organizations. For more information, contact Robert at: robertmalolly@claim-maps.com.

For more information on physician dispensing, click here. To learn more about how technology will affect health care, click here.

What I Have Learned From My Daughter’s Concussion

When I wrote an article four years ago about football concussions and the impact on workers’ compensation and the related third party lawsuits, I had no idea that my daughter would sustain one that continues to affect her five months later.

My daughter joined her high school’s freshman basketball team in November. During practice, another team member elbowed her in the nose while they were both reaching for the ball. Previously, she played injury-free basketball for the four prior seasons.

When I picked her up from practice, she said her nose really hurt. Being hit in the nose a few times in my life, I told her it would go away and she would be fine. But the next day, the school athletic trainer called to tell me my daughter had a concussion.

So I took her to the doctor who advised her to avoid television, computer and mobile device screens and to just lie down and let her brain heal. By the next week, when was walking outside to a classroom, she fell of the curb and briefly blacked out. Thankfully, another student helped her up.

Naturally, I took her back to the doctor who produced a letter that requested a reduction in homework and we were told she was not to participate in any physical activity. Until Winter break, there were many times when she could not sit through a full day of school without horrific headaches.


Due to my workers’ comp background,
I started wondering why there was not an academic equivalent
to what workers’ comp professionals call transitional duty.

After about six weeks, the doctor referred my daughter to a concussion specialist. This is when I learned that due to heightened awareness, concussions have become quite the cottage industry. There are not enough experts in the D.C. metro area to handle influx of concussions.

She was given medication to help her headaches and gradually, she was able to get through a week of school without needing to come home early. But her teachers were expecting more than the doctor had indicated and were hassling her with incompletes and slightly modified workloads.

It turned out that the physician letters I was faithfully faxing to the school were treated only as doctors’ excuses for absence. It was time to become an advocate.

After a visit to the guidance counselor’s office, the teachers got on the same page — for the most part. But when the next semester ushered in an uniformed physical education teacher, my daughter was being asked to write papers about childhood obesity and other topics in lieu of physical activity.


If you are a caregiver, assume the role of a case manager.

Due to my workers’ comp background, I started wondering why there was not an academic equivalent to what workers’ comp professionals call transitional duty. So I wrote the gym teacher and offered a list of what she could and could not do. She responded that the doctor’s letter was not specific enough. The doctor wanted to know what the phys ed teacher wanted. I didn’t know. So I forwarded the teacher’s letter to the doctor. We’ll see what happens.

Meanwhile, there have been extended waits for further testing beyond an MRI. Her nose still hurts but the ENT said with time it would resolve itself. We are still waiting to see other specialists.

It’s been five months since her date of injury. Unfortunately, her headaches continue and occasional dizziness continues. Here is what I have learned as the parent of a child who has sustained a long-term concussion.

  • It’s the first 48 hours after the concussion where rest and avoiding stimulation is the most critical. Unfortunately for my daughter, during the first 24 hours we had no idea that a strike to the nose also included a concussion so I was surprised to get the call from the athletic trainer.
  • If your child does not show signs of recovery in the first two to three weeks, see a specialist. If I know anyone who just sustained a concussion, I would make an appointment with a specialist because often there is a long wait.
  • If you are a caregiver, assume the role of a case manager. It is tough to not only manage the maze of specialists, but schools are still working on a comprehensive process and effective communication for interested parties. You must keep on top of this. Knowing what I know now, I wish I had done it sooner.
  • Keep track of symptoms and insist on specifics of what can be done physically to keep in shape.
  • Recognize that concussion awareness is putting concussion incidents at a nearly epidemic level. The medical field lacks the experts to handle the sudden influx from concussion awareness and honestly, I think they are still trying to sort out effective protocols.
  • Advocate for what the patient needs.
  • Finally, take every concussion seriously. When I was a kid, all my mother knew to do was to keep me awake because falling asleep could be a sign of losing consciousness. Get the injured person to a doctor as soon as possible and eliminate any sensory stimulating activity.

In the meantime, we are still waiting to see more specialists.




Low Interest Rates Call for Tighter Workers’ Comp Administration

Robert Malooly, CEO, Claim-Maps

Robert Malooly, CEO, Claim-Maps

I am pleased to offer the following guest blog by Robert J. Malooly. Bob has an impressive workers’ compensation resume, which includes being the chair of the Illinois Industrial Commission and the former head of the Washington State workers’ compensation system.

He has been a colleague of mine for nearly 20 years and there are few others who have the knowledge, vision and balance necessary to solve systematic workers’ compensation problems. — Annmarie

By Robert J. Malooly, CEO, Claim-Maps 

Prior to the dramatic financial upheavals of 2008, many insurance companies managed to make a substantial amount of money on their workers’ comp investments. Using premiums invested at a high return, was created a revenue stream that was used as a cushion to offset losses created by the economy, underwriting errors and other impediments to profitability. The longer claims dragged on, the more funds had to be held for extended periods of time to honor claims and protect against revenue shortfalls.

But the recession of 2008 put an end to the higher interest rates – and the cushion they helped generate. Although the economy has made progress towards recovery, the possibility remains that low interest rates may be with us for a long time.

The Federal Open Market Committee confirmed on the Federal Reserve System Board of Governors website that it will likely be appropriate to maintain the 0 to .25 percent target range for the federal funds rate for a considerable time. In a recent article for Business Insider, Greg Valliere, chief political strategist at Potomac Research, agrees, “The smart money says – again – that rates will surge next year; the smart money has said that for the past several years, and we still don’t buy it.”

Because low interest rates are putting pressure on workers’ comp insurance investments, this is likely a period when the gap between better and poor performing insurers will become wider. Muddling through isn’t a viable strategy with 2 and 3 percent interest rates. And since rates are forecast to remain low (or at best tick up mildly), insurers face huge pressure to find new solutions to ensure a successful bottom line.


Because low interest rates are putting pressure
on workers’ comp insurance investments,
this is likely a period when the gap
between better and poor performing insurers will become wider.

The answer is to administer claims far more precisely and reliably so premiums can be priced appropriately. To avoid negative numbers on the bottom line, it is vital that insurers undertake a major tune-up of their claims operations. Smart underwriters will be taking a careful look at the quality and consistency of their claim management processes.

The major question is, “Where to begin?” Sources across the Internet have varied opinions as to what constitutes best practices for managing workers’ comp claims. But all agree that well-documented internal policies and a culture of safety and awareness that prevents injuries are fundamental. 

According to Hartford Financial Services Group, once an incident occurs, prompt reporting is an extremely important tool to control claim costs. The 2004 study indicates that, “The earlier a business reports workers’ compensation injuries, the lower the claim costs are likely to be.” According to their survey of more than 41,000 lost-time workers’ compensation claims, even a week’s delay can increase claim costs by 10 percent. Claims filed a month or more after an injury cost an average of 48 percent more to settle than those reported the first week. Education and good communication about reporting procedures among all parties are essential to speed up the reporting process.

Along with a review of fundamental best practices, advances in technology may soon prove to be helpful in handling claims. An article in Insurance Journal entitled, “10 Challenges Ahead for the Workers’ Compensation Industry,” notes that the industry is lagging behind in technology. The growing use in the health care industry of patient communication portals and mobile claims applications to file reports online are examples cited in the article.


To avoid negative numbers on the bottom line,
it is vital that insurers undertake
a major tune-up of their claims operations.

Peter Thiel, co-founder of PayPal and Palantier, suggests the future may be found in “complementarity” relationships between machines and humans. In his book Zero to One, he states, “Better technology …won’t replace professionals. It will allow them to do even more.”

The quality of the human element in the workers’ comp arena is already extremely high. Claim adjusters, because of their long experience, almost develop a “sixth sense” for claims. It can stem from something as simple as the vocal inflections in a phone conversation with the injured worker. How do they say, “Yes, I’m willing to go back to work”? Are they filled with enthusiasm or does their tone indicate the opposite of the statement? Only a human claims adjuster can identify the difference. And it’s very difficult (if not impossible) to quantify.

Working against the adjuster, however, is the sheer volume of paperwork, choices and decisions to be made. They are faced with slogging through piles of paper files or enduring endless searches across multiple aging computer systems to follow the trail of a long-tailed claim.

Apply Thiel’s logic to workers’ compensation claims. Applications under development today may enable adjusters to see patterns quicker and allow them to process claims faster and more accurately.

Combining the best practices of the past with the talent of today’s adjusters and the technology of tomorrow may be the new formula that provides improved outcomes for both injured workers and their employers.

Robert J. Malooly is CEO of Claim-Maps an Olympia, Washington-based organization dedicated to making adjusters heroes, giving injured workers the best possible outcome and providing cost savings to self-insured organizations. 

What do you think will improve claims administration?

To read more about the effect interest rates have had on workers’ comp, check out my blog by clicking here.

TRIA Passes, Awaits Obama’s Autograph

After a retiring Senator put the kibosh on reauthorizing the the Terrorism Risk Insurance Act as part of the Cromnibus bill last month, a new Congress reauthorized the federal terrorism coverage backstop yesterday.

The bill, which demonstrated bipartisan support by a vote of 93 to 4, now awaits President Barack Obama’s signature

The “Terrorism Risk Reauthorization Act of 2015 (H.R. 26),” the bill:

  • extends TRIA for six years;
  • incrementally raises the program’s trigger from $100 million to $200 million in total insurance losses beginning 2016;
  • increases insurer co-share from 15 to 20 percent.
  • raises the aggregate amount the insurance industry has to absorb TRIA eligibility from $27.5 billion to $37.5 billion. To put this in perspective, losses from 9/11, which is about $43 billion would qualify for TRIA. The industry would be responsible for the first $37.5 billion, leaving a balance of $ 5.5 billion for the industry to borrow and pay back.

TRIA passage was especially important for workers’ compensation insurance. Unlike other lines, workers’  compensation cannot limit coverage due to nuclear, biological, chemical or radiological, (NBCR) attacks. 

I have written several blogs concerning TRIA — especially the actuarial and workers’ compensation implications. The most blog recent can be found by clicking here. 

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TRIA Reauthorization Bill Dies Due to One Retiring Republican Senator

The U.S. Senate adjourned yesterday without passing the bill that would reauthorize the Terrorism Risk Insurance Act (TRIA), which is set to expire December 31st. 

In other words, TRIA will not be passed this year.

And I am shocked. The general anticipation in Comp Land was that TRIA would pass but with more financial burden on insurance companies.

TRIA is very important to the economy.  The reason for TRIA is to help businesses afford terrorism coverage after 9/11 because insurers quit offering it or it was just too expensive.

The rules are a bit different for workers’ compensation carriers. They must cover all work-related occupational illnesses, injuries and deaths and cannot make an exception for those caused by terrorism. For this reason, the risk of losing carriers or risking high premiums can cripple state economies should a terrorist attack occur.

It is unreasonable to ask insurers to foot the bill for terrorist attacks
when it is the federal government that handles risk mitigation.

How could this happen when terrorism threats seem to grow on an almost a daily basis and the current political environment seems to be more concerned with ideals rather than reality? The insurance industry says it cannot absorb another 9/11. Given the low investment income and other challenges, this is quite possible.

Passage was looking promising last week when the U.S. House of Representatives agreed to reauthorize TRIA by a vote of 417-7, reflecting amazing bipartisan support. The seven house members who voted against it were all Republicans.

Blockages this time was also due to a Republican. Retiring Sen. Tom Coburn (R-OK) kept the bill from passage because it lacked a provision for states to opt out of a program unrelated to TRIA. U.S. Senate Majority Leader Henry Reid (D-Nev.) would not agree to add the measure, according to Politico

That’s right, TRIA did not pass due to an opt-out provision being demanded from one senator who is retiring anyway.

Since I am not a beltway insider, I don’t know where this notion came from, but I suspect it had little to do with TRIA’s merits. My guess is this has more to do with growing political tensions about states rights due to unilateral actions made by the Obama Administration. TRIA was re-authorized twice before.

Coburn might not realize a very significant fact that makes terrorism insurance different from any other. That is, insurance companies, which can encourage risk management to curtail potential losses in other lines, are dependent on government security and action to do the same. It is unreasonable to ask insurers to foot the bill for terrorist attacks when it is the federal government that handles risk mitigation. 

TRIA has had its challenges all along. Lawmakers wanted the insurance industry to carry a greater financial burden with higher deductibles. Some conservative Republicans did not like it on the principle that the government should not be expanding its reach. Others viewed it as a form of corporate welfare. Last week, the bill was pulled from cromnibus negotiations, because Republicans wanted revisions to the 2010 Dodd-Frank Act. Sen. Chuck Schumer (D-New York), who had introduced the most active TRIA legislation, refused to compromise.

The concept of government-sponsored terrorism coverage and/or backstop is nothing new. Several countries, including Britian, France, Spain, The Netherlands and Germany, offer some type of terrorism backup or fund, according to a report by Willis.

As sure as the day is long, TRIA will be introduced in the next Congress. Hopefully, the new Congress will be more sensible.

To learn more, check out my Actuarial Review article by clicking here.

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Doctors More Likely to Dispense Unnecessary, Stronger Opioids For Profit

When doctors prescribe strong opioids to injured workers, the assumption is the workers need them.

But when Florida banned physicians from selling strong opioids to injured workers, this did not translate into more scripts for pharmacies to fill.

Instead, doctors distributed weaker pain medications, according to a Workers Compensation Research Institute (WCRI) study, The Impact of Physician Dispensing on Opioid Use released today.

“When we compare pre- and post-reform prescribing practices, it appears that physician-dispensers not only reduced their dispensing of strong opioids, but also reduced prescribing of strong opioids,” Richard Victor, WCRI’s executive director, said in a statement.

“This raises concerns that a significant proportion of pre-reform physician-dispensed strong opioids were not necessary, which means injured workers in Florida were put at greater risk for addiction, disability or work loss, and even death,” he added.


The WCRI study is important because it confirms what many of us
in Comp Land have been suspecting all along.

Specifically, patients receiving physician-dispensed weaker pain medications – non-steroidal anti-inflammatory medications such as Ibuprofen — went up from 24.1 to 25.8 percent. The percentage of injured workers who received weaker but legal opioids increased from 9.1 to 10.1 percent. 

The study defines “strong” opioids as those on the U. S. Drug Enforcement Administration’s Schedule II ( i.e. CodeineHydrocodone) and Schedule III opioids, (i.e. products containing no more than 90 milligrams of codeine per dosage unit such as Tylenol with Codeine® and buprenorphine (Suboxone®). “Weaker” opioids are Schedule IV drugs that include carisoprodol (Soma®) and diazepam (Valium®).

Only two percent of injured workers taking weaker physician-dispensed pain medications in the first six months received stronger opioids from the pharmacy afterwards.

Physician dispensing of medication is a huge workers’ comp pet peeve of mine, as I covered in previous blogs.

This WCRI study is important because it confirms what many of us in Comp Land have been suspecting all along. When doctors can make money on stronger opioids, they will dispense them to injured workers even when safer alternatives work just as well.

Given the danger of opioid use and our nation’s opioid epidemic, I can only hope that this study gets the attention of lawmakers who have the guts to put injured workers before physician profits.

Oh, and here’s the fine print. The study is based on data concerning the medications dispensed for injured workers under the Florida workers’ compensation program. The claims were divided into two groups: pre-reform, with dates of injury from January 1, 2010 to June 30, 2010 (prior to the July 1, 2011, effective date of the ban) and post-reform, with dates of injury from July 1, 2011 to December 30, 2011 (immediately after the ban). The data included 24,567 claims with 59,564 prescriptions in the pre-reform group and 21,625 claims with 52,747 prescriptions in the post-reform group.

For more information about this study or to purchase a copy, visit http://www.wcrinet.org/result/PD_opioid_result.html

TRIA Re-Authorization Could Be in Jeopardy

Update 12/10/2014 5:12 p.m.: House passes TRIA by 417-7 votes. Total support from Democrats; 7 nays from Republicans. It’s off to the Senate….

With Congress having 21 days to re-authorize the Terrorism Risk Insurance Act (TRIA), passage has been stalled and removed from cromnibus budget negotiations, putting the program at risk.

Some fear the move could jeopardize TRIA re-authorization, which would adversely affect workers’ compensation and other commercial insurance.

As of yesterday afternoon, TRIA was one of the major remaining roadblocks in cromnibus negotiations, according to Politico. (For those who do not live inside-the-beltway politics, cromnibus refers to measures Congress has approved to keep the federal government funded to avoid a shutdown.)

At issue is Republicans’ desire to revise the 2010 Dodd-Frank Act, which created the Federal Insurance Office and financial regulations. House Financial Services Chairman Jeb Hensarling (R-Texas) is pushing changes to Dodd-Frank, while Sen. Chuck Schumer (D-New York), who introduced the most active TRIA legislation, is resisting such changes.

In response, House Republicans created a standalone bill they hope will force the Senate’s hand by passing TRIA with their Dodd-Frank changes, according to Politico. The House Rules Committee posted TRIA bill language yesterday as well.

Some fear the move could jeopardize TRIA re-authorization,
which would adversely affect
workers’ compensation and other commercial insurance.


As I wrote about in previous blogs, without passage, workers’ compensation faces financial liabilities because it must cover work-related terrorism exposure, which could result in premium increases in states where the unthinkable occurs.

No passage will also make other types of commercial insurance, including property coverage, much more expensive and difficult to obtain. As I covered in Actuarial Review, terrorism insurance is difficult to price because there have been few terrorist events on American soil (thank God) and future terrorism treats are difficult to anticipate.

No TRIA also means no Super Bowl because game organizers will not be able to obtain affordable terrorism coverage, according to BusinessWeek. The NFL has joined with other professional sports leagues and 80 business groups nationwide to form the Coalition to Insure Against Terrorism (CIAT) to urge Congress to reauthorize of TRIA legislation.

Not everyone is a fan of TRIA re-authorization. Conservatives view TRIA as a waste of taxpayer dollars. In a recent National Review blog, writer Mark Calabria called TRIA “no more than corporate welfare wrapped up in the flag.”

Given the growing terrorism risks due to ISIL and other terrorist organizations, passing TRIA makes total sense. My hope is enough lawmakers agree.