Top view: Bill Mudge, California Workers’ Compensation Assessment Board

Bill Mudge led the Workers’ Compensation Insurance Rating Bureau of California for 11 years as president and CEO, after spending nearly three decades in the insurance industry, mostly in leadership roles. . Based in Oakland, Calif., Mr. Mudge spoke with Business Insurance Associate Editor Louise Esola talks about workers’ compensation in the nation’s largest state economy and the future of business. Edited excerpts follow.

Q: You have spent a large part of your career working for insurers. What inspired you to work on the data side?

A: I spent 27 years in the California workers’ compensation market on the insurance company side, beginning in 1984. It’s been quite a journey – once as an observer and participant and now as a as a data scientist. I’ve seen nearly 40 years of California worker competition and all of its ups, downs, and gaps. I came here at the request of the WCIRB Board of Directors, having served as CEO of two insurance companies, including one I started from scratch in the mid-2000s, CompWest Insurance Co. California is the largest workers compensation marketplace in the world, certainly in the country. , accounting for approximately 20% of the market in the United States. It was an opportunity to get my hands on all the data in the industry, not just the data I had from the insurance companies I ran, but from my competitors. And now they are all our members. And so working collaboratively with them as members of this industry has been a real joy for me, rather than competing with them on the playing field.

Q: In the model industry, the state of affairs in California is closely watched nationwide. Why is that?

A: The sheer size of the California economy and the California worker compensation system. It’s the biggest. If you’re an insurer and focus on writing workers’ compensation, it’s hard not to have a big portfolio in California. So he has a lot of attention from that point of view. Also, I think people look to California as an indicator of the changing nature of the comp, as trends might shift across the country.

Q: What are some of the main issues right now?

A: Number one is COVID. It’s not going away. We are now almost at 300,000 reported claims; two-thirds of them were accepted into the complaints system. We have more reported COVID claims in 2022 with the variants than we had in 2021. Long COVID is pictured in one of five total cases and likely the iceberg below the waterline that we are concerned about. I think the medical community is having a hard time trying to define what long COVID is and what the symptoms are related to it. Certainly, we are starting to see long cases related to COVID in the data. What does that mean for potential things like permanent disability when people can’t return to work? I do not know. The medical community continues to seek to understand what this means.

The second problem is the economy. We were buzzing before the pandemic, then everyone went home, a lot of people lost their jobs, and then the job change started to happen as well. People who came back to work said, “I’m not going to work doing this anymore. I will do something else. And so we see – and it’s not surprising because we’ve seen it come out of the Great Recession – there’s a real correlation between economic recovery and increased claims frequency. We see this all over California. We also see less experienced workers versus experienced workers. And less experienced workers who are not as trained, not as skilled, have a higher propensity to get injured on the job from the start.

Rising cumulative trauma claims, medical inflation and rising medico-legal costs are also issues.

Q: The workers’ compensation market has been stable for years. Do you see this continuing?

A: I don’t think it’s stable now for all the reasons I mentioned. In fact, it’s a bit unstable right now and the costs are increasing. Even in a competitive market, at some point you need to assess the underlying costs. I think the good days are probably behind us right now.

Q: What can be Finished?

A: The silver lining in all of this is that workers get paid a lot more money, and higher wages equal higher premiums, at least on the insurance side, and higher premiums can cover a lot of costs without rate increase. But I think we’ll probably need both to start stabilizing the combined ratio in this system. And security. I think that needs to be front and center for employers, whether it’s all those COVID safety protocols we’ve all come to learn about or whether it’s good old-fashioned training employees. I think it comes down to the ABCs of running a safe workplace, and if the claim doesn’t happen, that’s a good thing.

Q: Everyone is involved in data right now in the workers compensation industry. They adopt it. What do you think of the place of data in this industry?

A: It’s really a data-driven business, and whether you’re on the claims side or the underwriting side, we have a lot of tools for members to help with benchmarking and insights and all that. And we provide data to insurers, agents, and brokers to help remove transactional friction from the system and streamline the California insurance transaction process. It’s just going to escalate – trying to get a view of what’s going on in the system now, not what was going on there when a policy and its data came to us after its final audit some 20 months after the creating the policy. We are really trying to understand what is happening now. Data is going to be increasingly important in a dynamic system like the one we live in now.

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