November 7, 2017
Digital innovation to improve safety, lower costs
by Paul Carroll
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.
Editor in Chief