The U.S. workers’ compensation market has enjoyed a period of low combined ratios, but looming challenges-such as an aging workforce and diminishing returns from existing risk mitigation strategies-threaten to disrupt this momentum. While many insurers have turned to reserve tapping to sustain appearances, this approach raises concerns about long-term profitability. Could wearable technology offer a solution to address these risks and “preserve the reserve”?
Key Challenges Facing Workers’ Compensation:
- Aging Workforce: An older workforce faces higher injury risks, increasing claims frequency and severity.
- Diminishing Returns from Current Strategies: Established mitigation techniques are reaching their efficiency limits, demanding innovative approaches.
- Profitability Pressures: Insurers risk unsustainable reserve depletion to maintain healthy combined ratios.
Role of Wearable Technology in Risk Mitigation:
Wearable devices offer promising solutions to address these challenges by:
- Monitoring Worker Health and Movements: Devices track physical conditions and detect unsafe practices.
- Identifying Environmental Hazards: Real-time alerts help workers avoid potentially dangerous situations.
- Reducing Injury Risk: By preventing incidents, wearable technology reduces costly claims and associated downtime.
Insights from Conning’s Report:
The Conning report, Wearable Technology’s Slow Acceleration to ‘Preserve the Reserve’, explores key trends in wearable adoption:
- Current Sentiments: A survey of 60 senior insurance executives highlights the perceived efficacy and ROI of wearable devices.
- Adoption Challenges: Barriers include cost, worker acceptance, and integrating wearables into current systems.
- Future Outlook: Insurers are optimistic about broader adoption as technology evolves and proves its value.
As the workers’ compensation landscape shifts, wearable technology presents a strategic opportunity for insurers to proactively manage risks and ensure long-term profitability. By embracing innovation, the industry can effectively respond to emerging challenges and preserve its reserves for future stability.
