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The Property Casualty 360 Out Front Ideas with Kimberly George and Mark Walls webinar of 2017 provided thoughts on Workers’ Compensation Issues to Watch in 2017.

Federal Regulations: The U.S. Department of Labor (DOL) under President Obama felt state workers’ compensation systems needed reform, and they were prepared to recommend minimum benefit standards to the states. President Trump’s nominee for Secretary of Labor, Andrew Puzder, has been a vocal opponent of many federal labor regulations. For now, any talk of the federal government getting involved in state workers’ compensation issues seems to be on hold.

Another potential impact of the election results is the direction OSHA may take in 2017 and beyond. In recent years, employers have complained that OSHA was more focused on enforcement than education and training, noting its shift of resources. Recent OSHA policies such as the publicly accessible online database and restrictions on post-injury drug testing were met with significant resistance from the employer community. OSHA falls under DOL and also is likely to have a new direction under the Trump administration.

Leave-of-absence regulations under the federal Family and Medical Leave Act (FMLA) have become increasingly more complex over the past eight years.

Americans with Disabilities Act (ADA) accommodation requests were initially related to ergonomics and transitional work accommodations following an illness or injury. Today, they have become more complex, including everything from bringing service animals into the workplace, allergies and noise accommodations to establishing work-from-home accommodations.

Market Cycles: Workers’ compensation market cycles are generally driven by changes in competition more than changes in exposures. Claims costs over the last 20 years have steadily increased, yet premiums during this same period have gone up and down.

During the January 1 renewal cycle, rates trended flat or slightly down compared to expiring premiums. Some problem states saw higher rates, including California, New York, Illinois and Florida. The declining rates compared to increasing claims costs have caused A.M. Best, Fitch and others to issue a negative outlook on workers’ compensation. This hyper-competitive market cycle is expected to end soon as the new entrants into the marketplace start to see the long-tail losses from their business hitting the books.

Lifetime Awards: Workers’ compensation is a challenge for employers and carriers due to the long-tail claims, that is, premiums collected today must cover losses for years to come. It has an impact on both carriers and employers in the cost of insurance today and future reserves.

The biggest drivers are advances in medical science that increase life expectancies, which in turn increase the exposures for lifetime indemnity and medical benefits. In addition, new drugs and treatments cost more than what they are replacing, especially with the cost difference between brand-name drugs and generic medication. Prosthetics are so much more advanced today than they were 10 years ago, but they also cost significantly more.

Treatment Guidelines: States have implemented a variety of guideline solutions, which include creating unique formularies and treatment guides and also adopting industry-available workers’ compensation guidelines. The lack of guideline consensus across stakeholders including physicians, regulators, payers and suppliers is an ongoing challenge to the system.

Constitutional Challenges: In 2016, elements of the workers’ compensation statutes in five states were found to be unconstitutional by each state’s respective Supreme Court, including the following:

1) Caps on temporary total disability benefits
2) Exclusion of coverage for certain farm workers
3) Caps on attorney fees
4) Time limits for filing cumulative trauma claims
5) Use of the current edition of the American Medical Association guidelines for impairment ratings