Federal Government Shutdown May Have Little Effect
Does the Federal Government shutdown have any effect on WC? The governmental shutdown was highlighted in a recent article in The Insurance Journal. I do agree with the author that the shutdown pertains to the federal level and Workers Comp, for the most part, is administered on the state level.
The ability of the Workers Comp markets to function without federal oversight or intervention may show that most programs are better served on the state level. The WC markets and systems would be in shambles if they were ever federalized when shutdowns do occur over the long term.
FEMA will even continue to operate the National Flood Insurance Program beyond any normal delays. A FEMA spokesperson confirmed there is little effect on the Property and Casualty markets.
One area the article alludes to is the federal debt ceiling. The financial markets could possibly feel experience a very shaky period if there is no agreement on the debt ceiling. Insurance carriers have experienced better than average returns on their investments over the last year. Any market or investment downturn would result in the carriers possibly raising rates to offset their short-term investment losses.
The bottom line is the P/C insurance industry including Workers Comp operates very well without federal oversight. Earlier in this blog, I had pointed out the push for federal licensing of agents, adjusters, and risk managers. The more areas that are federalized, the more the shutdowns will affect the insurance space in the future.
One future effect of the Affordable Care Act is there may be rationing of healthcare. Over time, the challenge of providing quick and applicable treatment options to injured workers may be a very tricky affair if the physicians’ offices are already maxed out with patients.
This type of treatment shortage may possibly be countered with more restrictive WC treatment networks where the injured workers would have preference over any other type of insurance.
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