Digital innovation to improve safety, lower costs

The fact that safety is leading to some rate cuts in workers comp lets me hope that the industry is making progress.


In recent weeks, I've seen a series of announcements of reductions in worker's comp premiums because of improved safety in the workplace. For instance, Colorado approved a 13% reduction in the loss costs portion of workers' comp rates for 2018; there was a nearly 30% decline in the rate of claims in the state between 2001 and 2015. 

While reductions certainly aren't happening across the board, and while safety isn't improving so noticeably everywhere, the fact that safety is leading to some rate cuts lets me hope that the industry is making progress on a theme that we've been sounding for some time now. That theme is the need to get away from a product mentality, where "factories" are churning out policies, and to a service mentality, where the focus is on using our hard-earned experience and access to volumes of data to help customers minimize risks in the first place. 

The workers' comp reductions will need to just be the start, of course. There are still all sorts of costs that can be driven out of the insurance process as digitization spreads, driven by the insurtech movement. As a senior brokerage executive says in this article, "Some 42% of premium is taken up with costs, according to the London model, and 30% of that is us.... We have to address that cost." And that's just on the brokerage side of the equation.

But I'll take progress where I can find it. Let's all congratulate ourselves—then get back to work. 


Paul Carroll,
Editor in Chief 

Paul Carroll

Profile picture for user PaulCarroll

Paul Carroll

Paul Carroll is the editor-in-chief of Insurance Thought Leadership.

He is also co-author of A Brief History of a Perfect Future: Inventing the Future We Can Proudly Leave Our Kids by 2050 and Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993.

Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.


Read More