LAS VEGAS — While workers’ compensation claim rates have been flat for a decade, claims rates are increasing, and no industry is seeing it more than construction, according to panelists at the 42nd International Risk Management Institute Inc. Construction Risk Conference.
“This is driven by medical advances,” said Mark Walls, vice president, communications and strategic analysis, for Safety National Casualty Corp. “They get better treatment; they get a medevac helicopter to a level one trauma center.
“The people who lived (after catastrophic accidents) used to die. But those people are really messed up, and so it tends to be a very, very expensive claim. We̵7;ve seen in our data set a 30% increase over the last three years of damages in excess of $10 million.”
Mr. Walls joined two other panelists who discussed workers’ compensation issues facing the construction industry, including the severity of claims, workforce challenges and the legalization of marijuana.
While some challenges are ongoing and not easy to quantify, the severity of injuries in the construction industry—where worker accidents are often more catastrophic than in other industries—is leading to an increase in high-dollar claims.
As an example, amputations—comparatively common in the construction industry—used to cost much less; a $5,000 prosthesis was common, Mr. Walls. Now, with technological advances that provide more function for an amputee, costs can climb to $40,000 for a device that is not as durable as the traditional prosthesis.
Another example that is common in the construction industry is those who are paralyzed after accidents, he said. The traditional lifespan for such injured workers had been a decade and could now be three times that long, he said.
“The medical science here is amazing,” he said. “But there are costs. These large claims become much, much larger, and unfortunately, these are the types of claims that you often see in your industry.”
Meanwhile, claims rates in the construction industry have been flat over the past decade, with the exception of the Covid-19 pandemic, which saw a sudden drop and subsequent increase in frequency, according to panelist Donna Glenn, chief actuary for the National Council on Compensation Insurance.
The generally flat trend helps offset rising costs related to severity, which is why the construction industry should constantly focus on workplace safety, she said.
Safety “is the fuel behind the long-term rate decline,” she said, when asked about technological advances that are making workplaces safer, such as wearables that alert workers to hazards. “The fact that (the industry) is constantly improving (on safety) contributes to the continued prevention.”
The panelists also addressed the challenge of finding qualified, experienced workers and what that means in terms of injury risks.
“The data shows that there tends to be a higher accident rate for the newer workers,” Mr. Walls. “The other concern is that if you don’t have enough workers, your people have to do more with less; they work longer hours. That can lead to overwork and risk of injury.”
The aging workforce is another challenge, as such workers tend to take longer to heal and may have comorbidities that complicate their recovery, Glenn said.
The potential impact of marijuana legalization is another issue facing the construction industry and its ability to prevent accidents. There is limited adequate drug testing in this area, and some jurisdictions prohibit drug testing in some cases.
Workers, many in the states that have legalized marijuana for medical and recreational purposes, are likely to participate, Mr. Walls.
“As an employer in a higher-risk industry, I’m sure it gives you great comfort to know that at any given time a percentage of your workforce is stoned,” Mr. Walls and noted that legalization efforts are underway for other drugs. Colorado, for example, just legalized hallucinogenic mushrooms.
“This is a big challenge for employers because your drug testing policies vary,” he said.
Another issue, he said, is that the Occupational Safety and Health Administration does not allow employers to have a comprehensive post-accident drug testing program for fear that workers will not report accidents and injuries out of fear.