Loss Costs, Rating Bureaus and the Workers Compensation Crisis

In a recent column in the National Underwriter, the new President of the NCCI, Bill Hager, predicted a "meltdown" of the private workers compensation insurance industry within the next two years unless significant changes take place. Bill did an excellent job of detailing a variety of reforms that are needed in the benefit delivery system and the claim adjudication process, but I believe the likelihood that all of these changes can be implemented in the next two years is not good. However, I believe there are some other changes, which Bill didn't mention, that could have a significant impact on alleviating the crisis in a short period of time. These changes, which relate to regulation and the role of rating bureaus, could be implemented fairly quickly because Bill Hager is both a former insurance commissioner and the kind of guy who can make things happen. The time to act is now, but the key question is, will Bill be able to overcome "institutional gridlock" at the NCCI, and receive sufficient support from his member companies, to make the internal changes necessary to avert a "meltdown" in 1992. Keywords: LOB-Workers Comp/General