The American Association of State Compensation Insurance Funds (AASCIF) brings together workers’ compensation (WC) insurance companies from across the U.S. and Canada that specialize in writing WC insurance for a single state or have jurisdictional control for a province, respectively. Each year, AASCIF hosts a conference for these companies (often referred to as state funds in the U.S.) and boards to connect and learn about the current state of the industry.
The AASCIF 2024 Annual Conference will take place July 28–31 at the Rhode Island Convention Center in Providence, Rhode Island, where attendees will participate in networking and volunteering opportunities and sit in on breakout sessions focused on creating data-driven operations, return-to-work strategies, workplace safety solutions, and more. Chris Hampshire, VP — Carrier Practice Sales, and Chris Duncan, Executive Vice President with Gallagher Re, preview what takeaways state funds can expect from the conference.
Having previously attended an AASCIF Annual Conference, what did you learn about state funds and the challenges they are facing in the industry?
Chris Hampshire (CH): My main takeaways were that a lot of state funds are looking to modernize their processes and find new avenues for profitable growth, and they’re facing many of the same challenges as organizations throughout the industry.
Technology is the number one concern. How do they keep up with the marketplace when it comes to investing in technology or utilizing new platforms like predictive analytics and decision-support tools? Are these embedded into their current claims system? Are they utilizing artificial intelligence (AI) to make the lives of their adjusters easier and more efficient? For many organizations, their systems are antiquated, and it would require a steep investment to upgrade their systems.
Then there’s the talent challenge. With turnover and the increasing number of retirements, particularly in claims, the level of expertise and personnel needed to maintain operations is strained. As state funds expand, it might help to partner with a company like Gallagher Bassett (GB) to provide the support that individual states may need to handle their claims volume with state-specific knowledge and strategies.
From a reinsurance perspective, what is the current state of the market for state funds? How are they expanding, or how are they maintaining stability given industry challenges?
Chris Duncan (CD): In our experience, AASCIF member companies continue to be the workers’ compensation experts in their states, providing high quality care for employees injured on the job. This leads to better outcomes for the worker and the carrier’s reinsurance partners. Medical inflation is a concern for the reinsurance market, and it is being monitored for developments; however, in our discussions with AASCIF members, they have not experienced a significant increase in medical costs. Medical advancements in general have improved survivability from severe injuries and can result in longer life expectancies. This can create some uncertainty for the reinsurance market and leads to higher reinsurance costs that, ultimately, can increase the attachment of a reinsurance program. Many of the AASCIF members are in a favorable surplus position, which enables them to retain more risk in a reinsurance program, so they have been able to comfortably manage higher retentions.
We are seeing more AASCIF members expand to other states on a limited basis, which is not completely new as many carriers already have capabilities to serve other states through relationships with fronting carriers. This extended coverage was usually for employers based in a specific state with an occasional need to work in contiguous states, but all fifty states can be affected to a lesser degree. Some AASCIF members have already launched a more formal effort to expand to other states, while others are only beginning to explore their options for growth.
How are you approaching this year’s conference based on these insights? What key messages are you expecting to hear?
CH: For state funds, the primary focus is serving the needs of their state’s constituents, but they are still a business entity; they still need to think about ways to grow. I’m curious about how the regulatory environment has evolved—are they in a position to grow their books of business beyond only WC in their state? More and more entities are building toward this point.
Some state funds have mutualized, giving them more opportunities to expand—possibly into different states, industry verticals, or lines of coverage. So, in preparing for the conference, we plan to deepen our connections with senior leaders and hopefully establish relationships with new contacts among the state funds in attendance, specifically highlighting how GB can support their operations based on their unique needs.
CD: We expect conversations regarding inflation and the impact on claims, technology improvements that help workers recover or return to work in some capacity, as well as legal developments or policy changes that could be impactful to the AASCIF companies. It would also be interesting to learn more about how AASCIF companies are adapting to a new work environment following the pandemic. Have there been any unusual trends or developments that warrant a concern?
What can GB’s Carrier Practice offer state funds as they look to evolve with the industry?
CH: At GB, we have the expertise to help state funds capitalize on opportunities, from new lines of coverage to jurisdictions, and the technology to support their growth, such as providing carriers with the data and analytics capabilities they need to understand their position in the marketplace.
We understand the specific challenges—for example, obtaining legislative authority to offer coverage outside their state lines—that these entities face and can provide them with the solutions they need to take on an evolving industry.
Reach out to our experts directly if you would like to schedule a time to connect at the conference, or book a free consultation here.
