While 91 percent indicated that future growth depends on providing a special customer experience, the survey showed that a majority do not currently see themselves as doing so. Indeed, when asked about their ability to provide their customers with multi-channel access to their services, including through mobile devices, 79 percent rated themselves as “average” or “among the weakest” in the industry. Moreover, 70 percent rated themselves as “average” or “weak” in their ability to tailor products and services to customers’ needs and 64 percent gave themselves similar ratings in their ability to provide innovative products and services.

“To pursue profitable growth, insurers need to achieve the kind of differentiation that allows organizations like Apple to charge a premium while building customer loyalty,” said Thomas Meyer, managing director of Accenture’s Insurance practice for Europe, Africa and Latin America. “And as Apple has shown, the answer is consumer-driven innovation that creates an exceptional user experience.”

To create this customer-driven environment, the survey found that insurers are investing heavily in mobility, with respondents indicating an $8.9-million average investment on mobile capabilities in the past three years. What’s more, some 81 percent said they expected to increase their rate of investment over the next three years. Nonetheless, Meyer cautions that money alone is not enough.

“To approach the mobile opportunity, insurers should look beyond what their competitors are doing, and evaluate the innovations of other leading ecosystem players—such as banks, mobile operating system vendors and emerging start-ups that reshape entire industries through mobile computing,” he said. “They should also explore the possibilities that a mobile ecosystem offers. By partnering with other key players, such as a bank or online payment service, a retailer, or a telecommunication operator, the insurer becomes part of a mobile initiative that gains wide adoption more quickly, offers greater functionality, and opens doors to large numbers of new customers.

A similar build out is under way for analytics, with an average of $21 million per insurer spent over the past three years and 68 percent of respondents indicating that they will increase spending on analytics capabilities over the next three years. John Del Santo, global managing director of Accenture’s Insurance practice, said that as insurers already have a handle on basic policy, loyalty and demographic information, they need to tap new data sources that can reveal more about consumer attitudes and usage information in order to differentiate and grow.

“Our survey reveals that insurers realize that improvement is required and additional investment is needed to enhance their analytics capabilities and better anticipate customers’ needs,” he said. “Access to new sources of data, for instance from social media, and improvements in data consistency, allow for much richer insights and help insurers answer questions such as ‘how will my customer behave, what are his or her interests, and what will happen?’”

©2011 Insurance Networking News and SourceMedia, Inc. All rights reserved.

The survey of 350 insurance executives–representing an even mix of respondents from property and casualty (personal and commercial lines) and life, along with approximately 5 percent from health–was conducted at KPMG’s 23rd Annual Insurance Industry Conference, where more than a third (36 percent) of those queried said business conditions have worsened compared to a year ago. This finding reflects a significant turnaround in executive perception compared to last year’s survey, when more than half (51 percent) said conditions had improved from 2009 to 2010. Further, respondents are not expecting improvements in the next 18 to 24 months, with 28 percent of respondents predicting another downturn/double dip before the economy begins to significantly recover. A full 58 percent of those queried believe the recovery will not occur until 2013 or later, says KPMG. Against these dire economic views, only 31 percent of insurance execs surveyed expect their company to perform above expectations next year �” a decline of 10 percent compared with 2010 KPMG survey results.

Not surprising is the concern insurers have over adequate pricing. Executives continue to tell KPMG that improving underwriting profit may be challenging in the next three years. In fact, nearly four in 10 executives (39 percent) characterized the chance of increased underwriting profit as “weak”�”up from 33 percent last year. Only two percent expect strong profitability, down from four percent in 2010.

Additional concerns also linger over the risk associated with regulatory reform, chiefly those reforms that affect shifting capital requirements, accounting valuation and disclosure, convergence of insurance contract standards and solvency modernization initiatives, according to survey results.

“As has been the case for a number of years now, insurers continue to carry a significant amount of capital,” said Laura Hay, national leader of KPMG’s U.S. insurance practice. “In this environment of excess capital, in order for the industry to be truly compensated for the risk that it absorbs, there needs to be an in-depth understanding of the company’s risk-adjusted rate of return to better assess capital allocation decisions on an ongoing basis.”

The bulk of KPMG’s attendees (87 percent) confirmed their belief that reforms coming from the banking industry, such as the requirement for higher capital levels, will make their way into the current insurance regulatory arena.

Insurers’ response to this dire climate is one of optimism, however, as executives confirmed that the top initiative from a management perspective over the next two years will be organic growth. In addition to organic growth, acquisitions/joint ventures and the introduction of new products will be the biggest drivers of revenue growth over the next three years.

Not surprising, these areas will require a focus and renewed commitment by insurers on investments in technologies, new products or services and strategic acquisitions, said the report.

“The industry is in a precarious situation,” said Hay. “These companies are challenged with the proverbial ‘perfect storm,’ including a sluggish economy, a weak pricing environment, and the inability to generate sufficient underwriting profit. The industry is also faced with unprecedented regulatory changes that will only add to the complexity of the landscape they must navigate. Companies are potentially faced with a ‘new normal’ given these industry challenges �” and once-successful operating models of the past may not work in the future.”

©2011 Insurance Networking News and SourceMedia, Inc. All rights reserved.

A strata of young, physically fit workers have always skipped employer health benefits they view as an unnecessary cost. But insurance agents say a growing number of older employees and even families are trying to save money by switching to low-priced health policies they buy on their own.

Insurance experts say employees can find credible, lower-cost coverage outside the workplace, through high-deductible plans. But they say it’s a gamble because it takes a lot of work to find a good plan without big holes. Individual policies typically do not cover as much and often charge higher co-payments and deductibles. They also can raise your rates at will and drop you if you get sick.

“Dropping coverage at work? Generally a bad idea,” said Carlos Castresana, South Florida unit leader at Wells Fargo Insurance Services, which designs health benefits for employers. “Even if you’re healthy, you don’t know if you’ll get sick.”

Yet more employees are thinking about it as they reach their open-enrollment period to sign up for 2012 coverage at work.

Employees are expected to pay 5.9 percent more for health coverage next year, as employers pass along costs to workers, consultant Towers Watson reported. A family policy from work cost an average $344 a month this year, according to an annual employer survey by the Kaiser Family Foundation.

The increases arise partly because this year, companies paid 8 percent to 9 percent more this year for employee health benefits, the Kaiser survey found.

About 19 percent of U.S. employees passed up work coverage this year, up from 15 percent a decade ago, Kaiser said. But the figure is 27 percent this year at small firms with 22 to 49 employees and at retail businesses.

Boca Raton insurance agent Don Staton said he has heard from a half dozen employees in recent weeks asking to buy low-price individual plans because the monthly premiums of coverage at work had grown too costly.

Jupiter agent Beverly J. Kingsley, who sells group and individual policies, said she has sold family policies to several executives who bypassed health benefits at their companies. One got coverage for $800 a month, half of the workplace premium.

“Everyone is trying to see if there’s a cheaper way to do it,” said Kingsley, who is president of the Palm Coast Association of Health Underwriters.

But Castresana, Staton and Kingsley almost always try to talk employees out of ditching workplace health benefits, especially if the person has a health condition or a family. Here’s why:

Coverage. Unlike group policies, most single policies do not cover maternity care and may drop you if you get pregnant. Most offer little or no mental health treatment, physical therapy or substance abuse care. Hospital coverage is often limited, exposing the patient to a risk of a big bill.

Co-pays and deductibles. Your share of the bills for doctors, hospitals and prescription drugs is usually higher in an individual plan.

No guaranteed coverage. Group plans can’t turn down an employee, but individual plans can deny or drop you based on your health. They can also deny coverage for pre-existing conditions.

Rates. They can raise rates for entire age groups during a coverage year.

“I understand the premiums [at work] are a tough pill to swallow, but look at the benefits you get,” Staton said.

The employees who may do better by skipping workplace coverage are young, healthy people who need little or no health care and are willing to take a chance they won’t get sick, agents said.

“Younger people tend to subsidize the older employees in a group health plan, so they can probably get it for less on their own,” Castresana said. But even a simple broken arm can wipe out the savings of skipping workplace health benefits, agents said.

Staton said families can get good prices on high-deductible plans that make employees shoulder the first $2,500 to $7,500 of medical bills before coverage starts. These may cost $200 to $1,500 a month for a family, depending on the details.

To pay those deductibles, workers can set up a health savings account using pre-tax money, which cuts their income tax bill. In that scenario, the employee may not have to dip any deeper into his pocket to pay for health care, Staton said.

The crucial step is finding a high-deductible plan with solid coverage of major expenses such as hospitalization, Staton said. Even so, employees are vulnerable to plans dropping them.

Employers don’t want their workers — young or old — to pass up health benefits, because if the group gets too small, the insurer may drop the company or jack up the premiums, agents said. So companies are trying to keep workers happy by offering lower cost alternatives.

AutoNation, for example, is offering a new high-deductible plan, company benefits manager Vanessa Mainster said. JM Family has a plan that costs employees as little as $3 to $4 a month.

“If everyone leaves your plan, it will impact premiums,” Mainster said.

By Bob LaMendola, Sun Sentinel.  Staff writer Marcia Pounds contributed to this report.

Copyright © 2011, South Florida Sun-Sentinel

Those questions have been the toughest ones for the Obama administration’s lawyers to answer in court appearances around the country over the past six months. And they are likely to emerge again if, as expected, the Supreme Court, as early as Monday, agrees to be the final arbiter of the challenge to President Obama’s signature health care initiative.

The case focuses on whether Congress overstepped its constitutional authority in enacting parts of the law. Lower courts have reached divergent conclusions.

Even judges in lower courts who ultimately voted to uphold the law have homed in on the question of the limits of government power, at times flummoxing Justice Department lawyers.

“Let’s go right to what is your most difficult problem,” Judge Laurence H. Silberman, who later voted to uphold the law, told a lawyer at an argument in September before the United States Court of Appeals for the District of Columbia Circuit. “What limiting principle do you articulate?” If Congress may require people to purchase health insurance, he asked, what else can it force them to buy? Where do you draw the line?

Would it be unconstitutional, he asked, to require people to buy broccoli?

“No,” said the lawyer, Beth S. Brinkmann. “It depends.”

Could people making more than $500,000 be required to buy cars from General Motors to keep it in business?

“I would have to know much more about the empirical findings,” she replied.

Judge Brett M. Kavanaugh, who ended up in dissent, then jumped in. “How about mandatory retirement accounts replacing Social Security?” he asked.

“It would depend,” Ms. Brinkmann replied.

Ms. Brinkmann was cut off before she could elaborate on her answers. In other settings, she and other administration lawyers have described what they see as the constitutional limits to government power, though not typically using concrete examples.

They have said, for instance, that laws authorized by the Constitution’s commerce clause must be economic in nature, must concern interstate commerce and must address national problems.

They have also said that the health care market is unique. And they have suggested that questions about constitutional limits can miss the point. The only question actually before the courts, they said, is whether the particular law under review was within Congress’s authority. Other cases, they said, can be decided as they arise. But there is reason to think that at least some Supreme Court justices will want to hear what a ruling in favor of the health care law implies and what precedent it sets.

In 1995, when the court struck down a federal law that prohibited people from carrying firearms in school zones, Chief Justice William H. Rehnquist wrote that “we pause to consider the implications of the government’s arguments” in defending the law — that stopping activities that could lead to violent crime relates to interstate commerce because it affects “national productivity.”

Under that reasoning, Chief Justice Rehnquist wrote, “It is difficult to perceive any limitation on federal power,” adding that “if we were to accept the government’s arguments, we are hard pressed to posit any activity by an individual that Congress is without power to regulate.”

Chief Justice Rehnquist died in 2005, but three of the justices who joined his majority opinion — Justices Antonin Scalia, Anthony M. Kennedy and Clarence Thomas — are still on the court.

The concerns expressed by Chief Justice Rehnquist amount to what lawyers call the slippery slope. Many judges are reluctant to issue rulings without some sense of what their consequences will be in other cases.

But defenders of the health care law say that such concerns are not a reason to doubt its validity.

“Slippery slope arguments are themselves often slippery,” Walter Dellinger, who was acting solicitor general in the administration of President Bill Clinton, told the Senate Judiciary Committee in February. He gave an example. “If it is within the scope of regulating commerce to set a minimum wage,” he said, “one might argue, then Congress could set the minimum wage at $5,000 an hour.” But that would never happen, he said, for practical, political and legal reasons.

When a divided three-judge panel of the United States Court of Appeals for the 11th Circuit, based in Atlanta, struck down in August the mandate that individuals purchase and maintain health insurance from private companies, slippery slopes were very much on the minds of the judges in the majority.

“The government’s position amounts to an argument that the mere fact of an individual’s existence substantially affects interstate commerce, and therefore Congress may regulate them at every point of their life,” Chief Judge Joel F. Dubina and Judge Frank M. Hull wrote.

On Tuesday, on the other hand, a three-judge panel of the District of Columbia Circuit upheld the law. Judge Silberman, who had grilled Ms. Brinkmann so aggressively, wrote the majority opinion, and his discussion of the limits of Congressional power may have handed the administration a bigger victory than it wanted, because it presumably did not want to win on the grounds that Congress could do anything at all.

Judge Silberman said he remained troubled by what he called “the government’s failure to advance any clear doctrinal principles limiting Congressional mandates that any American purchase any product or service in interstate commerce.”

Then he adopted a version of Mr. Dellinger’s argument.

“That a direct requirement for most Americans to purchase any product or services seems an intrusive exercise of legislative power,” Judge Silberman wrote, “surely explains why Congress has not used this authority before — but that seems to us a political judgment rather than a recognition of constitutional limitations.”

Judge Silberman said there were Supreme Court decisions on issues like regulating the use of medical marijuana that had endorsed broad Congressional power to legislate in the name of commerce.

“It certainly is an encroachment on individual liberty,” he wrote of the health care law, “but it is no more so than a command that restaurants or hotels are obliged to serve all customers regardless of race, that gravely ill individuals cannot use a substance their doctors described as the only effective palliative for excruciating pain, or that a farmer cannot grow enough wheat to support his own family.”

In dissent, Judge Kavanaugh praised the majority for its honesty in describing what followed from its ruling.

“The majority opinion here is quite candid — and accurate,” he wrote, adding: “The majority opinion’s holding means, for example, that a law replacing Social Security with a system of mandatory private retirement accounts would be constitutional. So would a law mandating that parents purchase private college savings accounts.”

Within hours of the decision on Tuesday, opponents of the health care law were issuing statements, and their theme was predictable. “Like the government,” said Randy E. Barnett, a law professor at Georgetown, “the majority could identify no limit to an unprecedented power of Congress.”

© 2011 The New York Times Company

The annual report, “Marketplace Realities: Solid Footing and a Foundation for Growth,” noted that this year “may break all records for insured losses.” Even before the 2011 hurricane season began, the market had sustained $70 billion in property losses, according to the report. “We are on track to pierce the $100 billion mark for the first time,” the report said.

But the report projected that while prices for catastrophe-exposed property accounts could rise by as much as 12.5% in the first quarter of next year, those for noncatastrophe exposed property will be flat or even decrease by as much as 5%.

For primary casualty, excess/umbrella casualty, workers compensation and automobile liability, Willis projects pricing to be flat to 5% higher. But pricing for most executive risks will tend to be flat or slightly lower during the first quarter.

Following demand

“As in any successful industry, we go where the demand is,” said Willis Chairman and CEO Joe Plumeri in his introduction to the report. “The obvious place is in the growth areas of the world, particularly Asia. But demand for insurance and risk-related services may come from places we haven’t always looked for it in the past.”

He cited as examples some North American risks such as flood and terrorism that are backstopped by the government.

“The combination of government debt and poor growth may, in the not-so-distant future, spell a decline in the ability of government to maintain this role,” he wrote. “There is only one industry ready to fill the void.”

Copyright © 2011. Crain Communications, Inc.

Ohioans passed an amendment to the state constitution that says Ohio residents cannot be forced to buy health insurance. The amendment, however, will likely do very little to prevent Ohio residents from being forced to buy health insurance.

The U.S. Supreme Court will meet in a closed session this week to debate whether it should hear a challenge to the federal healthcare law’s individual mandate. If the court ultimately strikes down the coverage mandate, Ohio’s amendment — and the smattering of other state laws disapproving of the mandate — would become moot. If the court upholds the mandate, it would preempt state laws.

Nevertheless, Ohio initiative is another sign of how just unpopular the mandate is. Democrats — and labor, a key ally of Obama’s during the healthcare debate turned out heavily in Ohio for a separate ballot question on collective bargaining. But even with strong turnout around a traditionally Democratic issue, 66 percent of voters had supported the anti-mandate initiative at the time the Associated Press called the vote.

The new subsidy would protect farmers when their revenue drops. Critics say it is an unprecedented program that could pay billions of dollars to farmers now enjoying record-high crop prices.

The subsidy would take the form of free insurance that would cover farmers’ “shallow crop losses” before their paid insurance kicks in. It would replace several other subsidy programs, including direct payments preferred by Southern rice and cotton farmers. Growers get the direct payments regardless of crop yields or prices. They don’t even have to farm.

The “shallow loss” insurance programs could begin paying out once a farmer’s revenue falls by as little as 5 or 10 percent. Federally subsidized crop insurance, for which farmers pay premiums, would kick in with deeper losses.

The income insurance plan has a diverse group of opponents — environmental groups that have long argued against farm subsidies, conservatives who say the plan won’t save the government much and even one of the nation’s largest farm groups. The American Farm Bureau Federation says the beefed-up insurance could encourage farmers to make riskier decisions and drive up the price of land.

The chairs of the House and Senate Agriculture Committees are looking at folding the new subsidy into a farm bill proposal they are quietly crafting as part of their charge by the deficit-cutting congressional supercommittee to cut farm spending. Chairwoman Debbie Stabenow, D-Mich. and House Agriculture Chairman Frank Lucas, R-Okla. have said they will shave $23 billion from farm and food aid programs over the next decade. The new revenue insurance program would be considered part of their effort to achieve that goal.

The committee leaders have not yet released the proposal, but lawmakers have signaled that the revenue insurance will be part of the deal. It is unclear just how it would be crafted and what effort will be made to control its costs. Critics fear a worst-case scenario that would use current, record-high crop prices as a baseline for average revenue — that way, farmers who suffer minor revenue losses in future years could get major payouts, which could eat up some of the $23 billion in promised savings.

Federally subsidized crop insurance programs are now costing taxpayers up to $7 billion to $8 billion annually despite the biggest farm profits in nearly four decades. The Agriculture Department predicts net farm income by the end of this year will total $103.6 billion, a rise of 31 percent from 2010. The department says this is the highest value since 1974, adjusted for inflation.

Replacing the direct payments seems inevitable. Critics have singled them out and even farm groups now say they are politically indefensible. But critics of the new income insurance subsidy say it could create new problems for taxpayers and farmers alike.

“The only rationale for a new federal revenue guarantee program on top of existing revenue insurance programs is that it seems politically easier to defend than direct payments,” said Bruce Babcock, an agricultural economist at Iowa State University. Babcock released a report last week calling revenue insurance a “boondoggle.” The report was commissioned by the Environmental Working Group, an advocacy group that has long opposed federal farm subsidies.

The shallow loss plan has been pushed mostly by corn and soybean growers who use crop insurance more frequently. Rice and cotton growers have generally favored direct payments because their crops are more expensive to grow.

Jon Doggett of the National Corn Growers Association says the criticism is unfair, and that the new program would be designed to cost less than current subsidies. He says corn growers and other farmers have been trying for years to find a better way to manage the risks they are taking and that crop insurance hasn’t always been adequate.

“Large crops like corn, soybeans and wheat are so integral to so many other parts of the food chain,” Doggett says. “You want to provide some sort of stability in that food chain.”

Agriculture committee leaders argue that the revenue insurance plan makes sense because farmers would receive payments when prices fall or their crops are destroyed, unlike direct payments which are paid in good times and bad.

“We’ve got to move away from paying people when they don’t need it,” said Minnesota Rep. Collin Peterson, the top Democrat on the House Agriculture Committee. Peterson and Kansas Sen. Pat Roberts, the top Republican on the Senate Agriculture Committee, have participated in negotiations with Stabenow and Lucas.

Peterson said negotiators are still working on some of the problems raised by critics, including the potential that the revenue insurance could overpay farmers in good times. He said the lawmakers may end up proposing different programs for different crops.

Agricultural economist Babcock and the Farm Bureau both say insurance should only kick in when a farmer has major losses.

Shallow losses “do not typically jeopardize the survival of a farm operation,” Farm Bureau President Bob Stallman said in a letter to the agriculture committees.

The agriculture committee leaders are writing a full farm bill to submit to supercommittee, hoping to push the legislation through that process to avoid even bigger cuts when the current farm law expires at the end of next year. The supercommittee as a Nov. 23 deadline and Congress, by law, has to vote on it before Christmas.

Critics complain the multibillion-dollar is being written behind closed doors. Even many members of the two agriculture committees have been shut out of the process.

Wisconsin Rep. Ron Kind, a Democrat who unsuccessfully led efforts to reduce farm subsidies during debate over the last farm bill four years ago, said he is concerned that those who want to see subsidies scaled back will be shut out of the process completely. He wrote a bipartisan letter with 26 other members last week urging a more open process.

“The concern is that the committee tries to use this to rewrite a farm bill with new mandatory spending when the goal is cost savings,” Kind said. “These are complicated programs and they should be properly vetted. There are huge consequences.”

Copyright © 2011 The Associated Press. All rights reserved. 

The refunds will be paid to holders of group and individual health insurance policies that cover 573,748 people in New York, according to a spokesman for the state’s Department of Financial Services.

Under a change to New York state insurance law implemented in June 2010, health insurers are required to spend 82 cents of every dollar collected in premiums on medical care or refund the difference to policyholders. The federal Patient Protection and Affordable Care Act implements a similar minimum medical loss ratio requirement on health insurers nationally beginning in 2011, mandating that insurers must spend at least 80% of premiums on medical care in the individual and small group markets and 85% in the large group market or refund the difference to policyholders.

Who is getting refunds

According to a department statement, most of the refunds—$44.7 million—are being made to large employers, defined as those that provide health care coverage to 51 or more plan members. Another $25 million is being refunded to small group plans, defined as those with 50 or fewer members. And $27.2 million is being refunded to 16,773 people who purchased health insurance coverage as individuals, while another $14.9 million is being paid to 96,719 people with Medicare supplement policies.

Refunds already have been paid to policyholders in the individual and small group markets. The department has instructed insurers to make refunds to affected policyholders in the large group market by Dec. 15.

“In this economic climate, every penny counts and in this case, insurance companies were overcharging New Yorkers to the tune of millions of dollars,” said New York Gov. Andrew M. Cuomo, in a statement. “This should serve as a message to companies that we are watching, and we will not tolerate any action that wrongly hurts the finances of the people of New York.”

Copyright © 2011. Crain Communications, Inc.

Modeling has been available in workers comp for years, but insiders say newer versions are more accurate in identifying problematic indemnity claims before their losses spiral out of control.

“I think everyone is always looking for that Holy Grail of information,” said Paul Braun, managing director of casualty claims for Aon Global Risk Consulting in Los Angeles.

Liberty Mutual Group Inc. launched a new predictive model this year that uses up-to-date data to calculate whether comorbid health conditions and psychosocial issues—such as obesity, depression or job dissatisfaction—could hinder an injured employee’s return to work.

Though a model Liberty Mutual introduced in 2006 considered such data, its revised VantageComp model is better at identifying claims that start small and grow slowly into larger indemnity losses, said George Neale, executive vp and general claims manager in Boston. Claim adjusters use the new data to point workers to resources that can help them recover faster, he said

“Slow-emerging claims are the ones that are a challenge for us in workers compensation,” Mr. Neale said. “And if you can understand those earlier, you can do something about them.”

He said the new model will be successful if it helps Liberty save at least 5%, or $100 million, on the $5 billion in workers comp claims it pays annually.

More insurers are using predictive models to help stem costs for workers comp claims, according to a survey earlier this year by New York-based consulting firm Towers Watson & Co. Of more than 100 insurance executives participating in the survey, 32% said they use predictive models in workers comp, up from 18% in 2009.

Aiming for accuracy

Companies also are continuing to tweak the tools to improve accuracy.

Aon’s Mr. Braun said companies are working to find data that pinpoints why some claimants take longer to recover than others with similar injuries and are evaluating whether previous data collection methods were accurate. Successful models use that information to actively help patients get well, he said.

Aon’s Early Claim Intervention model has shifted in the past two years to help adjusters better identify claims that will result in larger-than-expected losses. Mr. Braun said the brokerage recently analyzed seemingly simple medical-only claims that became complicated indemnity losses, and uses that data to spot other claims that could follow the same troubled trajectory.

Claims flagged through the process are sent to Aon’s most experienced adjusters, who then connect claimants with health care providers that can speed their recovery.

“You get them to the right doctor and get them to the right treatment instead of letting them linger,” said Mr. Braun, who estimates the model has helped reduce workers comp costs by 15% for its clients.

Atlanta-based third-party administrator Broadspire Services Inc. adapted its E-Triage model six months ago to help claims adjusters better determine whether smoking, obesity and other factors slow worker recovery times.

Gary Anderberg, Broadspire’s Philadelphia-based practice leader for analytics and outcomes, said social issues also play an important role in Broadspire’s newer mathematical formula. For instance, the more family members a claimant typically has, the less likely he or she is to return to work.

“If there are preschool-age children in your home, the fact that you’re home on a workers compensation claim may mean you don’t need to pay for babysitting,” Mr. Anderberg said. “And that can be a nice thing.”

He said Broadspire’s model, launched five years ago, is updated continually with new data. A version being developed by the TPA will allow its adjusters to predict how many days an injured worker will stay off the job and use that guideline to help prevent excessively long work absences.

Reed Group Ltd., a disability case management services firm in Westminster, Colo., released a new version of its MDGuidelines predictive model for workers comp cases in February.

Its model, used by various insurers and employers, predicts the recovery time for claims based on factors such as geography, comorbid conditions and job satisfaction. Reed Group then suggests medical resources that can hasten recovery times.

Dr. John Seymour, president of guidelines for Reed Group, said the model can help reduce a claimant’s time off work from an average of 55 days to about 30.

“We’re always striving to get that employee back to work as soon as possible,” Dr. Seymour said.

Companies expect predictive models to keep evolving as insurers and administrators discover new ways to calculate workers comp risk.

Broadspire’s Mr. Anderberg said he believes competition among companies will drive significant advances in predictive modeling in the next several years.

“There are a lot of good people out here, and some really creative thinking is going into it,” Mr. Anderberg said.

Copyright © 2011. Crain Communications, Inc.

In a new report comparing the cost to the nation of motor vehicle crashes with that of traffic congestion, AAA analyzed the financial damage of traffic crashes in 99 urban areas. It concluded that the cost of crashes in those cities was more than three times that of congestion: $299.5 billion compared with $97.7 billion. The congestion costs include the price of gas wasted idling in traffic and loss of motorists’ time.

The study, which used 2009 data, found that the average cost of an injury-only crash is $126,000.

AAA based its estimates on Federal Highway Administration data that place dollar values on 11 components: property damage; lost earnings; loss of household activities; medical costs; emergency services; travel delays; vocational rehabilitation; lost time at work; administrative costs; legal costs; and pain and lost quality of life.

The costs of fatal crashes and those causing serious injuries have risen sharply since 2005, the last time AAA did a comparable study; then, the cost of a traffic fatality was $3.24 million, an injury crash $68,170.

AAA’s study is designed to push road safety to the forefront of the national debate over transportation priorities as Congress considers a long-term highway funding bill, says Chris Plaushin, AAA’s director of federal relations.

“We wanted to raise the profile and raise the awareness,” he says. “Right now, it’s jobs, it’s construction, it’s economic growth that are being talked about. This is part of our effort to bang the drum about safety.”

David Schrank, co-author of an annual analysis of congestion patterns in the USA, says it would be difficult to try to reduce either congestion or crashes without also working on the other.

“A lot of times, if you look at locations where you have congestion, you’ll also find plenty of crashes occurring, and vice versa,” says Schrank of the Texas Transportation Institute, a research arm of Texas A&M University. He says previous studies have found that 25%-40% of congestion results not from outmoded roads or heavy traffic but from crashes, weather events and objects in the roadway.

Motor vehicle crashes are the leading cause of death among people ages 5-34 in the USA.

The per-person cost of crashes causing deaths or serious injuries varies among similar-sized cities: from $2,016 in Miami-Fort Lauderdale to $796 in San Francisco among large cities; from $3,747 in Baton Rouge to $618 in Colorado Springs among medium cities, and from $2,787 in Beaumont-Port Arthur, Texas, to $670 in Boulder, Colo., among small cities.

AAA makes recommendations to reduce the financial impact of crashes. Among them: more investment in proven safety measures such as cable barriers along medians to prevent crossover accidents, modernized roundabouts and rumble strips.

© 2011 USA TODAY, a division of Gannett Co. Inc.