The NCCI Annual Issues Symposium 2022 – Day 2 – a huge amount of data and ideas.
The second day of the NCCI Annual Issues Symposium 2022 started with Dr. Bob Harwig, University of South Carolina. Dr. Hartwig covers the most data in the shortest amount of time.
Dr. Bob Hartwig—Top 5 Ways COVID Changed the Economics of Workers Compensation—For Better or Worse – Clinical Associate Professor of Finance, Darla Moore School of Business, University of South Carolina
I asked Dr. Hartwig with only 45 minutes available – how many slides would he have to cut out from his usual 60-minute presentations. He said that he took out two – cutting to 63. Classic Dr. Bob.
- Despite many analogies, today’s economy and operating environment for insurers couldn’t be more different from the late 1970s to the early 1980s.
- The “R” word: Recession is increasingly likely but still avoidable. Recent recessions have been much less severe.
- Extreme volatility in the investment environment is both an opportunity and a concern for insurers, especially in long-tail lines such as worker’s compensation.
- The economic reverberations from COVID will last years beyond the end of the pandemic itself.
- “America’s labor force is sick, tired, and grumpy.”
- “Economic uncertainty has Wall Street climbing its proverbial ‘Wall of Worry,’ and P/C insurers are along for the ride.”
- The labor markets are tight > 3.5% unemployment
- The Misery Index = unemployment rate + inflation rate The highest misery decade was 1974 – 1983.
- Workers Comp Combined ratio for next year falls from 87.0 to 86.5.
- The residual market is now less than 1% of worker’s comp premiums
- There are two jobs available per unemployed person.
James Guszcza—Human Factors—Expanding the Science of Predictive Analytics and Artificial Intelligence (AI)
- Human-machine hybrid intelligence is a better framework to guide practice than “AI.”
- The focus of the hybrid-intelligence design is real-world results, not machine outputs.
- Hybrid-intelligence design goes beyond machine learning to take into account human values, needs, and relative cognitive strengths and limitations.
- AI is the new electricity
- AI is an ideology – not a technology
- AI stupidity by humans causes AI to be scrapped
- Algorithms work well, people don’t work well with algorithms
- Human strength – judgment Algorithm strength – reckoning
- Excessive automation almost killed GM
“Without smart design, machine learning can result in artificial stupidity rather than artificial intelligence.”
Sean Cooper – Practice Leader and Senior Actuary, NCCI and Raji Chadarevian – Director, Medical Regulation and Informatics, NCCI—The Medical Dilemma
- Medical inflation in worker’s compensation has been moderate for the past decade. But with the recent dramatic rise in consumer prices, concerns have emerged about medical inflation.
- 3 phases of medical treatment
- Medical/pharmacy maintenance
- Physicians are 41% of the medical cost distributions
- ASCs increased 6% year-over-year
- More major surgeries performed at ASCs
- Costs are 11% lower at ASCs
- RXs are 7% of medical costs (negative 2.6% annual change)
- 40% of medical payments are under Medicare/Medicaid
- Changes in medical claims costs are driven by two factors: the price of medical services and utilization, which measures the mix and number of services provided to an injured worker.
- NCCI’s most recent data shows drug costs are declining, physician costs are up slightly, and facility costs are rising in the worker’s compensation system.
- Raji Chadarevian: “Prices are only half the story. Prices matter. Utilization matters also.” I have been saying this since the early 2000s, any decrease in price is counterbalanced with an increase in utilization.
- Sean Cooper: “While general inflation is up, worker’s compensation medical trends have been moderate and the forecast remains relatively moderate in the near future.”
The presentations were stellar and the sound system was outstanding. For videos of the NCCI Annual Issues Symposium 2022, go here.