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Workers' Comp in Trouble Again?

The workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work.  market is approaching another crisis. In fact, insurer combined ratios mirror those of the late 1980s (in excess of 120 percent) when the financial health and survival of the workers' comp comp

See comparison.
 system were in question, according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 a recent study by the Washington-based American Academy of Actuaries The The American Academy of Actuaries, also known as the “Academy” or the AAA, is the body that represents and unites United States actuaries in all practice areas. .

Another survey--this one by the Washington-based National Academy of Social Insurance--found that workers' comp benefit payments and costs were slightly higher in 1998 than in 1997. But, when adjusted for the growing size of the work force and the rising wages of covered workers, benefits and costs continued to decline from their all-time highs in 1992 and 1993.

Even so, industry leaders predict a looming looming: see mirage.  crisis in workers' comp. But the causes this time around and those of a decade ago are different in many ways, according to the actuarial ac·tu·ar·y  
n. pl. ac·tu·ar·ies
A statistician who computes insurance risks and premiums.

 association. In the 1980s, lost costs were rising, the residual market had become a large burden on the voluntary market, and price levels in many states were only beginning to be deregulated.

Now, however, price competition is driving up combined ratios and has dramatically increased the availability of voluntary-market insurance. Employers have benefited from several years of sustained improvement in the affordability of workers' comp coverage, and pressures to increase benefits are emerging.

In addition, the use of managed care in workers' comp was in its infancy in the late 1980s. But now managed care is a mature industry with numerous programs in place.

This time around, the tools for dealing with the worsening wors·en  
tr. & intr.v. wors·ened, wors·en·ing, wors·ens
To make or become worse.

Noun 1. worsening - process of changing to an inferior state
decline in quality, deterioration, declension
 workers' comp market are different as well. Existing self-insurance plans and the development of new products have given employers more options for funding their programs. This may allow for future reform initiatives that balance the adequacy of benefits with the affordability of the system, researchers say.

Other industry leaders say that managed care can do more. It has the potential to help workers' comp out of this crisis--that is, if the problems arising from the ineffective use of managed care are addressed. Managed care combined with other interventions, such as loss prevention, fraud detection, and best practices, can bring the workers' comp system back on the road to health again.
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Publication:Risk & Insurance
Date:Aug 1, 2000
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