The changing dynamics shaping workers’ compensation
Discover how economic pressures, technological advancements, and evolving workforce demographics are reshaping the workers’ comp landscape. Experts share insights on future trends, regulatory changes, and the role of proactive prevention
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In the fast-moving landscape of workers’ compensation, several key trends are shaping the industry in 2024. The rise of remote work, changing workplace demographics, and an increased focus on mental health are all driving significant change – not to mention, regulatory overhauls and an increasingly competitive insurance market.
Amid these changes, a proactive approach to risk management and a focus on personalized care is more vital than ever. Navigating these complexities to ensure a balanced and fair compensation system is no easy task. Speaking to Insurance Business, industry experts Kathy Kranz, vice president and CFO at Pinnacol Assurance; Vlad Stojanovic, vice president and COO at EverPeak Insurance; and Brandon Bossard, workers’ compensation broker at Jencap, share their insights on where the workers’ compensation space is heading.
“We recently launched EverPeak™ insurance on Attune’s platform, which focuses on providing accessible, reliable, and easy workers’ comp coverage to businesses, with a particular focus on small businesses and those with the need for a broader risk appetite, industries that often struggle to find easy and timely access to workers’ comp coverage.”
Changing workplace demographics have also shifted the landscape. Jencap’s Brandon Bossard notes that the younger workforce is less injury-prone compared to the older workforce; however, financial concerns and the cost-of-living crisis may well lessen the significance of this trend.
Kranz highlights that many baby boomers are rethinking their retirement plans, with some opting for part-time work to supplement their income.
“Examples include Pinnacol’s highly successful program to curtail inappropriate opioid-prescribing and high-cost topical medications, as well as Pinnacol’s approval of spinal procedures, physical therapy, and other medical services only when reasonable and necessary,” Kranz explains.
Meanwhile, Bossard notes that the industry is seeing a slow increase in rates as carriers adjust to the pressures of medical inflation. However, he adds that the frequency of claims has also come down in recent years, which has somewhat offset the biggest impacts of inflation. He highlights that to keep this going, proactive prevention is vital.
“We have to focus on pre-incident factors that can help prevent claims from ever happening,” Bossard says. “Our job is to match up the right market and carrier to a risk to ensure the needs of the insured are met, whether that involves monthly trainings and meetings with the insured, or even conducting loss control visits.”
“The younger workforce isn’t getting injured as frequently as the older workforce, which is a reversal pattern from previous years,” Bossard adds. “However, with a younger workforce, there are more contact injuries than slips, falls, and trips.”
From the broker’s perspective, Bossard says that there has been a notable increase in capacity in the form of startup MGUs, as well as the desire of established players to continue to own market share. This has led to something of a “race to the bottom” in terms of prices.
“As brokers, we continue to monitor the financial stability of our carrier partners,” Bossard says. “We believe that to keep a healthy system, rates will need to begin to increase, even if slightly, over the next few years.”
Kranz notes that while some states may impose stricter AI regulations, others may have none at all. This disparity could create a competitive advantage for regional carriers operating in less regulated states.
“These carriers could potentially outpace national brands burdened with complying with regulations across 47 jurisdictions, requiring them to develop multiple systems to meet varying requirements,” Kranz says.
She highlights that the increased use of AI to create pricing models could also create significant challenges for regulatory approval.
“As AI technology operates as a ‘black box,’ regulators may be hesitant to approve pricing models if companies fail to provide sufficient transparency into the underlying algorithms and data used,” Kranz explains. “This lack of transparency could raise concerns about potential bias, discrimination, or unfair practices,
Jencap is one of the largest wholesalers with over $3 billion in total written premium. With over 1200 employees and 49 offices nationwide, Jencap has a national presence. The workers’ compensation division of Jencap represents all premium sizes and classes of business.
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Accelerated by the COVID-19 pandemic, dispersed workforces have become increasingly common. In Colorado alone, an estimated 53 percent of employers now have employees outside of the state.
According to Kathy Kranz, this is creating new challenges in risk assessment, coverage, and safety for both employers and insurers.
“Remote work offers benefits like access to wider talent pools and increased flexibility; it also presents unique risks,” Kranz says.
“Employers face less control over work environments, leading to potential safety concerns and complexities in determining liability. Additionally, the geographic dispersion of employees necessitates navigating varying state regulations and potential hazards, often requiring multi-state coverage or policy adjustments.”
Vlad Stojanovic adds that this can be particularly challenging for small businesses in high-risk industries, and they are facing growing challenges in securing fast and reliable workers’ compensation coverage.
“Large national carriers often prioritize lower-risk businesses for underwriting, leaving these essential small businesses underserved,” he comments.
“As brokers, we continue to monitor the financial stability of our carrier partners. We believe that to keep a healthy system, rates will need to begin to increase, even if slightly, over the next few years”
Brandon Bossard,
Jencap
Industry experts
Vlad Stojanovic
EverPeak™
Kathy Kranz
Pinnacol Assurance
Brandon Bossard
Jencap
Industry experts
Brandon Bossard, Workers’ Compensation program broker at Jencap, has over seven years of insurance experience. Bossard has experience overseeing underwriting, sales, claims, and loss control segments. His focus on workers’ compensation affords him the insight to understand the needs of insureds, their retailer and insurance companies alike.
Jencap
Brandon Bossard
Kathy Kranz, CPA, CGMA, AIAF, ARC, oversees Pinnacol’s corporate strategy & development, financial reporting, business planning, enterprise risk, and actuarial functions as vice president and chief financial officer. Kranz joined Pinnacol in 2008 and has held various positions on the finance team. Her accomplishments include doubling Pinnacol’s surplus, decreasing rates for customers, issuing general dividends back to policyholders for eight consecutive years (totaling $385 million), and issuing a $100 million surplus note to an external investor. She was also one of the founders of Cake Insure and currently serves as Cake’s treasurer. Most recently, Kranz led Pinnacol’s first-ever acquisition of Attune, a technology platform and managing general agent (MGA).
Pinnacol Assurance
Kathy Kranz
Vlad Stojanovic, vice president and chief operating officer, EverPeak™, joined Cake Holding Co. in 2023 after supporting the organization for several years as a consultant. He is a seasoned senior leader with extensive expertise in expanding markets, transforming core insurance functions, and applying data and technology to drive performance for insurance carriers across all property and casualty (P&C) insurance lines. In 2024, Stojanovic helped launch EverPeak Insurance. Prior to joining Cake Holdings, he spent 12 years at Oliver Wyman, a global management consulting firm, a business unit of Marsh McLennan.
EverPeak™
Vlad Stojanovic
Vlad Stojanovic
EverPeak™
Kathy Kranz
Pinnacol Assurance
Brandon Bossard
Jencap
Industry experts
Brandon Bossard, Workers’ Compensation program broker at Jencap, has over seven years of insurance experience. Bossard has experience overseeing underwriting, sales, claims, and loss control segments. His focus on workers’ compensation affords him the insight to understand the needs of insureds, their retailer and insurance companies alike.
Jencap
Brandon Bossard
Kathy Kranz, CPA, CGMA, AIAF, ARC, oversees Pinnacol’s corporate strategy & development, financial reporting, business planning, enterprise risk, and actuarial functions as vice president and chief financial officer. Kranz joined Pinnacol in 2008 and has held various positions on the finance team. Her accomplishments include doubling Pinnacol’s surplus, decreasing rates for customers, issuing general dividends back to policyholders for eight consecutive years (totaling $385 million), and issuing a $100 million surplus note to an external investor. She was also one of the founders of Cake Insure and currently serves as Cake’s treasurer. Most recently, Kranz led Pinnacol’s first-ever acquisition of Attune, a technology platform and managing general agent (MGA).
Pinnacol Assurance
Kathy Kranz
Vlad Stojanovic, vice president and chief operating officer, EverPeak™, joined Cake Holding Co. in 2023 after supporting the organization for several years as a consultant. He is a seasoned senior leader with extensive expertise in expanding markets, transforming core insurance functions, and applying data and technology to drive performance for insurance carriers across all property and casualty (P&C) insurance lines. In 2024, Stojanovic helped launch EverPeak Insurance. Prior to joining Cake Holdings, he spent 12 years at Oliver Wyman, a global management consulting firm, a business unit of Marsh McLennan.
EverPeak™
Vlad Stojanovic
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Changing demographics, dispersed workforces
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Brandon Bossard
Jencap
Kathy Kranz
Pinnacol Assurance
Vlad Stojanovic
EverPeak™
Vlad Stojanovic, vice president and chief operating officer, EverPeak™, joined Cake Holding Co. in 2023 after supporting the organization for several years as a consultant. He is a seasoned senior leader with extensive expertise in expanding markets, transforming core insurance functions, and applying data and technology to drive performance for insurance carriers across all property and casualty (P&C) insurance lines. In 2024, Stojanovic helped launch EverPeak Insurance. Prior to joining Cake Holdings, he spent 12 years at Oliver Wyman, a global management consulting firm, a business unit of Marsh McLennan.
EverPeak™
Vlad Stojanovic
Kathy Kranz, CPA, CGMA, AIAF, ARC, oversees Pinnacol’s corporate strategy & development, financial reporting, business planning, enterprise risk, and actuarial functions as vice president and chief financial officer. Kranz joined Pinnacol in 2008 and has held various positions on the finance team. Her accomplishments include doubling Pinnacol’s surplus, decreasing rates for customers, issuing general dividends back to policyholders for eight consecutive years (totaling $385 million), and issuing a $100 million surplus note to an external investor. She was also one of the founders of Cake Insure and currently serves as Cake’s treasurer. Most recently, Kranz led Pinnacol’s first-ever acquisition of Attune, a technology platform and managing general agent (MGA).
Pinnacol Assurance
Kathy Kranz
Brandon Bossard, workers’ compensation program broker at Jencap, has over seven years of insurance experience. Bossard has overseen underwriting, sales, claims, and loss control segments. His focus on workers’ compensation affords him the insight to understand the needs of insureds, their retailer and insurance companies alike.
Jencap
Brandon Bossard
Published August 12, 2024
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“Remote work offers access to wider talent pools and increased flexibility… However, employers face less control over work environments, leading to potential safety concerns and complexities in determining liability”
Kathy Kranz,
Pinnacol Assurance
“Large national carriers often prioritize lower-risk businesses for underwriting, leaving these essential small businesses underserved. We recently launched EverPeak™ insurance on Attune’s platform, which focuses on providing accessible, reliable workers’ comp coverage to businesses”
Vlad Stojanovic,
EverPeak™
The regulatory landscape
When it comes to regulation, the world of workers’ compensation rarely stands still. The last year has seen a number of interesting developments in regulation – most notably with regards to AI use, mental health protection, and changed experience modification factor algorithms.
Kathy Kranz says the recent surge in AI technology has offered both opportunities and challenges for the workers’ compensation industry. While it has the potential to revolutionize claims processing, fraud detection, and risk assessment, the pace of innovation is also somewhat restrained by the historically slow-moving insurance sector.
“Furthermore, the fragmented nature of workers’ compensation regulations, varying from state to state, creates an additional hurdle,” Kranz says. “As AI becomes more integrated into the industry’s systems, carriers face a potential increase in compliance costs due to the need to navigate a patchwork of regulations.”
making it difficult for regulators to assess the fairness and accuracy of AI-driven pricing.”
Another regulatory change that’s had a profound impact on the workers’ compensation space is the experience modification factor algorithm updated by the National Council of Compensation Insurance (NCCI), which came into effect in November 2023. Bossard says this has had a particularly strong impact on insureds with smaller and more frequent claims, as this causes modification factors and costs to rise.
The NCCI has also noted that more states are enacting laws related to mental health, which Bossard says is a positive step.
“Certain states expanded workers’ compensation coverage to include post-traumatic stress injuries, while other states enacted laws that allow first responders to get the care for PTSD developed while on the job,” Bossard explains.
“This is a step in the right direction to addressing the mental health of workers in America. Mental health claims will be the industry’s toughest and will negatively impact those carriers that don’t develop the expertise to handle the claims appropriately.”
Pinnacol Assurance is a top-performing provider of workers’ compensation insurance, offering top-rated injured worker care, customized safety solutions, and a comprehensive return-to-work program that helps customers reduce risk and save costs. Pinnacol invests in communities through its nationally recognized apprenticeship program; Pinnacol Foundation scholarship program; award-winning diversity, equity, and inclusion work; grant-making; and other achievements. Building on this legacy of excellence, Pinnacol has created EverPeak™, an insurance solution designed for the most demanding businesses across the United States. Backed by Pinnacol’s 100+ years of industry-leading expertise in underwriting, claims, and risk management experience, EverPeak offers quick, affordable, and dependable protection for businesses facing the toughest risks.
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Medical inflation applies pressure
Medical inflation remains a significant challenge in the workers’ compensation landscape.
Rising costs in medical labor, materials, and overutilization are driving up overall claims costs, which are now estimated to be between 50–60 percent nationally. And while advances in life-saving technology are critical, they are predicted to lead to more complex and costly long-term treatments for severe injuries, which will put further strain on the system.
Pinnacol Assurance has taken some steps to proactively address this trend. It has created a provider network that prioritizes physicians and ancillary personnel who are properly credentialed. It also implemented a utilization review program that helps ensure injured worker care is consistent with Colorado’s Medical Treatment Guidelines.
The future of workers’ compensation
With a new generation rapidly evolving within the workforce, the workers’ compensation space is poised for transformative change – both inside the industry and outside of it.
Generation Z is starting to take on leadership roles in organizations, where they have the power to shape policy and influence purchasing decisions. Gen Z is also looking to use their buying power to support causes they care about and to uplift their communities.
Kranz says that Gen Z is also revitalizing the image of skilled trade jobs and is making them a desirable career path for a new generation of workers.
“This is evident in a surge of interest on social media platforms like TikTok, where the hashtag #BlueCollar boasts millions of views showcasing the daily lives of skilled tradespeople,” Kranz notes.
“Moreover, a recent study by the National Student Clearinghouse revealed a 16 percent increase in enrolment in vocational-focused community colleges in 2023, with construction trades programs experiencing a 23 percent jump.”
Kranz says that carriers need to adapt their strategies to align with Gen Z’s values – and this means not only offering competitive pricing but also demonstrating how they benefit the workforce and broader community.
Meanwhile, ongoing economic pressures such as medical inflation and the rising complexity of claims will continue to impact the market. Bossard expects to see increased consolidation in the market over the coming years, as well as a greater reliance on emerging technology to keep efficiency levels high.
“Big data and AI will continue to improve and will make the submit-quote-bind process and the payment of claims much smoother and quicker,” he says.
“For those that invest and implement the changes, they will thrive. For those that don’t, they will be contracted into other programs and competitors.”
Rise of remote work
Changing workplace demographics
Workers’ compensation: key trends
Regulatory changes
Rise of AI
Source: IBIS World
billion in revenue
$56.7
44,000+
170+
employees
Workers’ compensation market – 2024
businesses
Source: IBIS World
