As workers comp rates take a downturn, what issues will challenge a newly competitive market in 2015?

Here are the top workers comp issues agents should keep an eye on this year:

Legislative and regulatory changes. According to Peter Burton, senior division executive for state relations at the National Council on Compensation Insurance (NCCI), the most important issue the NCCI has focused on so far this year is the extension of TRIA.

“Of all the states that the NCCI has filed in, 36 have approved our policy form, including Texas,” Burton says. “It’s very important that we file documents, policy forms and endorsements that recognize the aspects of the new law. Workers comp was always a contemplated injury, whether there was an extension or not.”

The NCCI is also looking into making a national filing for the elimination of the Anniversary Rating Date Rule—the date that governs the application of rates and experience modifiers when a prior policy has been canceled midterm. “State regulators and carriers have come to us and said, ‘The rule is archaic—we now have competitive rating in almost all the states the NCCI operates in. We don’t need a rule that was put in 100 years ago,’” Burton explains.

Another issue state regulators have brought to the NCCI’s attention? Uncooperative audits. “Because of the economy, there’s still a large proportion of employers not letting auditors get into their books,” Burton says. “Regulators have suggested perhaps we need a uniform national rule that would be a stimulus for employers to let the auditors in to review their books, and if you don’t, there may be a premium penalty that is attached to your policy.”

Medical developments. Whether it’s fee schedule adjustments, position limitations, repackaged drug expenses or opioid abuse control, “companies and legislators are always looking at ways to control medical costs,” Burton says. “There are bills out there that deal with compensability and presumption, either with trying to bring in mental injuries under the comp act or bring in additional cancers or hypertension conditions for firefighters, police officers, first responders, ambulance drivers—that’s a big topic in legislation.”

Gerald Chiddick, vice president of marketing for Amerisure, says wellness in general will be a hot topic in 2015. “Especially now with health care reform still taking shape and where and how companies invest in that, that could turn into something potentially of value to the workers compensation industry,” he says.

Some legislation could also expand the use of certain drugs on a state-by-state basis, Burton says. “A lot of states are looking at the use of medical marijuana to treat injured patients, although it’s not a compensable drug that is under the law in most states,” he explains. “But you still see states allowing it for various conditions, either workers comp or non-workers comp for certain cancers or glaucoma.”

The same goes for marijuana legalization outside medical purposes. “Keep an eye on what’s transpiring in places like Colorado and Washington that have that within their purview,” Chiddick says. “Currently workers comp has drug-free credits in various states that it can leverage and utilize for firms and organizations that have well-enforced and well-maintained drug-free policies for their employee base. Legalization of this particular product could have an impact on something like that.”

New exposures. Burton says to keep an eye on the solar energy industry as an emerging workers comp risk. “I’ve seen a couple of states interested in having new classifications established for this industry,” he says.

And expect new businesses to bring new risks as the economy continues to improve. Chiddick cites numbers from the Bureau of Labor and Statistics that show unemployment is below 6% for the first time in 7-8 years—a good sign that the country is regaining economic health. “There’s still the need for jumpstarting the small business arena, but a lot of these small businesses depending on their size and scale may not necessarily be at a size yet that requires comp,” Chiddick explains. “So you get a lot of firms in the incubator stage, and what might come out of those incubators could be some new exposures and new classes that require comp.”

“The growth in workers compensation follows any growth there is in the economy,” agrees Pam Wagner, senior vice president and workers compensation practice leader for V3 Insurance Partners. “We have seen continued growth in the construction industry, especially when it comes to premium audits.”

Right now, the predominance of job growth is in the professional and business services, according to the Bureau of Labor and Statistics. “A lot of the gains in exposure in those areas have been in construction, manufacturing, health care and food service,” Chiddick says. In manufacturing in particular, recent reshoring of jobs and companies coming back to build in the United States again “are doing it with a lot more technology than they did previously,” Chiddick says. “The use of labor is at a much higher level and maybe with fewer hands than it was 25 or 30 years ago.”

Tech advances. The intelligence associated with wearable devices “is worth paying attention to,” Chiddick says. Data harvested from wearable tech could not only inform both employers and insurance companies about the risk of loss in the workplace, but even assist in remediating a loss or attack before it occurs. “Right now those aren’t things that have very clearly defined coverage components associated with the line of business tied to them,” Chiddick says—but that could change in the near future.

E-commerce platform technology is also gaining popularity in the workers comp market—a new opportunity that “is really key to an agent’s success,” according to Wagner, whose company offers a state-of-the-art Internet-based workers comp program designed for single and multi-state risk with full online quote and bind capabilities.

“When working with a small-midsize customer, you really need access to an underwriting platform that will give you quick access to quoting and binding so you can deliver an immediate proposal to your customer,” Wagner explains. “Internet portals are cost savings to the agents because everything is done online, from entering the application to uploading PDFs—you gain the immediate acceptance of a proposal, which allows you to spend more time with your client.”

Like most lines of insurance, workers comp will also respond to a heightened use of data analytics and predictive modeling. “The increasing use of analytics in workers compensation is definitely helping with risk identification, risk mitigation and strategies that help to make the line more profitable,” Chiddick says.

Jacquelyn Connelly is IA senior editor.