Recently, Adam Friedlander spoke with Insurance Journal about the effect the future of our economy and potential tariffs can have on the workers' compensation system. Read the excerpt below:
Economic uncertainty and the potential impact of tariffs on the economy could also be catalysts in changing market conditions, some experts say.
"The economy, and the strength of the most recent few years of economy, have been helpful in keeping claims low," said Adam Friedlander, president of Friedlander Group in New York. But if the economy changes and as predictions of a recession come into play, then that might mean change in the workers' comp system, he said.
Friedlander, who specializes in workers' comp for businesses across New York and manages 10 safety groups underwritten by the New York State Insurance Fund, has enjoyed fruitful times in the line over the past 10 years. He said his firm's performance, profitability, and the dividends they pay to members in his safety groups have performed "amazingly well" in this workers' comp environment. But he believes the bottom of the market is inevitable.
Today, he sees claims continuing to trend down but he's not sure why. "When I ask the top experts in the field, 'Why are claims going down, what's the silver bullet reason?' I never can quite get an answer," he told Insurance Journal. "I mean, yes, there's improved safety, the economy has a lot to do with it; it's been strong. But I kind of always felt that at the end of the day it's just cyclical--except this cycle hasn't seemed to turn, yet."
He said in home healthcare, for example, rates are down 60% since 2018. "It's just a gigantic decline in rate and it's still profitable," he said. Those profits flow back to his group members in the form of a dividend, he said. "But I do think when you cut the premium down to the bone, when you cut it 60% in terms of rate, eventually you're going to hit bottom," he said.
Friedlander has been expecting the end of the market cycle for some time. "But each year the rating board comes out with an additional drop in rate," he said. "But I think we're very near the bottom" he added. "How much further can you go?" he asked. "Eventually claims will have a bad year, and with rates so low, there's going to be no alternative but to raise the premiums," he said. "Even though it's gone on longer than I think anyone expected, it will hit bottom and then have to go up."
The article also covers topics like reserve redundancy, rising costs of pharmaceuticals, claim frequency and its future. Check out the article here.