The Top 10 Trends in Risk Management for Public Agencies in 2015
Public agencies face a plethora of challenges this year. In an industry marked by hyper-litigation, volatile legislation and increasing regulation, it’s critical to know what’s on the horizon and where to focus your efforts to reduce property and casualty costs.
Here’s our Top 10 list of issues to watch for in 2015:
- Workers’ Comp Reform. Despite SB 863 and contrary to political beliefs, WC costs continue to increase. Further reform is needed, though unlikely for a couple more years until costs once again spiral out of control.
- Reducing WC Claims Costs. “Predictive claim analytics,” “outcome-based networks” and “integration of wellness” will become important to create long-term savings.
- Rising Rx Costs. California has 57 prescribed painkillers for every 100 people. Generics have exemplified supply and demand, as physicians prescribed them due to lower costs. However, demand has increased and costs have skyrocketed. Look for further consolidation of PBM’s and work with your TPA on cost containment.
- Data Breaches. They’re becoming daily headlines. And we’re seeing more and more cities, schools and colleges getting “hacked.” We can expect more schools to be hit, followed by legislation and regulation as politicians look to make headlines.
- Sexual Abuse. It’s a heartbreaking epidemic and far from over. “Mandatory Reporting” (AB 1432) is now the law. But, while this is good legislation for protecting children, we expect increased reporting and opportunistic attorneys filing PRAs to see if agencies have complied with training requirements.
- Terrorism. I hope I’m wrong, but it’s unrealistic to think we won’t see a rise in domestic terrorism. For maximum emotional impact, attacking innocent children is an unfortunate reality schools must be prepared for. The fact that the Terrorism Risk Insurance Reauthorization Act of 2015 (TRIA) was extended through 2020 tells us something.
- Property & Casualty Reinsurance. The property and liability market will continue to be “soft” with an abundance of surplus capital and “cat bonds” flooding the market. Realistically, it will take a $100-billion insured catastrophic event to begin to move the market. That’s good news for purchasing reinsurance. For public agencies, particularly those in pools, your self-insured claims experience equates to the majority of your overall costs. Meanwhile, the excess WC market will likely harden as an aging workforce, longer life expectancies, advances in medical technologies, medical inflation and fewer excess WC carriers lead to upward pressure on both SIRs and premiums.
- Increasing Litigation. Opportunistic attorneys will take advantage of public agencies by filing claims where “coincidentally” their legal fees are paid by the defendant. Schools can expect an increase in Cal 200 claims, while all public agencies can expect an increase in Title II ADA claims for failing to provide adequate facilities or a sufficient plan.
- Legalization of Marijuana. California will continue to debate the merits. But, regardless of what happens, employment-related issues for medical marijuana will continue.
- Drones. Utilization of drones will increase along with safety, privacy and coverage issues.
While this Top 10 list is a look into my crystal ball, here’s what I do know with absolute certainty. In 2015, my beloved Lakers will continue to struggle, L.A. still won’t have a football team (though the Rams are coming), and Keenan will be working diligently to help you navigate these many challenges.