Natural catastrophes can cause significant disruptions in the workers compensation sector ranging from interrupting medical care and payments for injured workers to displacing the employees at insurers and third-party administrators charged with handling their cases to triggering an uptick in claims from first responders after events.

While some states have eased regulations for workers comp insurers in the wake of a disaster, others have been slow to respond, leading insurers to come up with their own strategies for ensuring continuity of care for injured workers, experts say.

Seven of the most expensive natural disasters in history occurred in the past decade, and the losses in 2017, largely caused by hurricanes Harvey and Irma, were the most catastrophic on record, causing $312.7 billion in economic damages, according to the National Oceanic and Atmospheric Administration. Last year was the fourth-highest disaster loss year due to the California Camp and Woolsey fires and hurricanes Michael and Florence, according to the agency.

“What we’ve seen is a shifting toward more disasters of larger proportion at an accelerated rate,” said Lisa Anne Bickford, Sacramento, California-based director of workers compensation government relations at Coventry Workers’ Comp Services. “It’s not the isolated event anymore as much as it used to be. This is something becoming increasingly problematic.” 

Jennifer Wolf, executive director of the Middleton, Wisconsin-based International Association of Industrial Accident Boards and Commissions, said some jurisdictions have “very nimble, very robust infrastructure in place” that can help respond to not only natural disasters, but events such as an epidemic like the early 2000s outbreak of SARS.

Before hurricanes Harvey and Irma hit landfall in the southern United States in 2017, the Texas workers compensation insurance commissioner issued an emergency declaration waiving penalties for insurers and third-party administrators and allowed injured workers to seek care in non-network facilities. The bulletin also eased prescription requirements to allow pharmacies to provide 90-day supplies of drugs and extended deadlines for medical examinations. Florida issued a similar bulletin, and the Carolinas and Georgia have previously issued similar declarations.

In California, Gov. Gavin Newsom has allotted $550 million toward wildfire prevention strategies and issued a state of emergency in late March because tree deaths in the state could create an “extremely dangerous fire risk.” However, the state has not created a plan for workers compensation in the event of a disaster, said Ms. Bickford.

“In my own state, you would think we would be a leader in this area, but oddly in workers compensation, there is no plan at all in California,” said Ms. Bickford.

The California Department of Insurance did not respond to a request for comment.

Workers comp insurers should have a strategy for dealing with the aftermath of disasters, from torched medical facilities to flooded-out field offices and closed courthouses, said Mark Lechowitz, chief compliance officer at Rolling Meadows, Illinois-based Gallagher Bassett Services Inc.

“How do you get folks treated when you don’t have providers … what do you do when you have compensability decisions that have to be made” when the courts are closed, said Mr. Lechowitz.

Insurers must be “prepared for an influx of new claims activity, primarily from emergency responders … and public entities assisting in cleanup efforts and recovery,” said Paul Koziatek, CEO of Bradenton, Florida-based Risk Management America LLC, a safety risk consulting company.

Texas Mutual Insurance Co., based in Austin, had to find a way to ensure injured workers had the means and ability to receive their weekly benefit checks after Hurricane Harvey flooded much of Houston in 2017, and contacted each injured worker residing in an affected area to set up direct deposits, said Kim Haugaard, senior vice president of policyholder services.

While insurers may want to look to their insurance commissioners for guidance in developing a workers compensation disaster plan, they need to ensure they have solid business continuity plans that make communication a priority, said Mr. Koziatek.

Boston-based Liberty Mutual Insurance Co. established its weather playbook in 2017 to help it identify and contact workers in the path of hurricanes in the Atlantic and afterward to ensure they had medications and could travel to scheduled appointments and procedures, said Doug Anderson, vice president and regional manager of workers compensation claims for Liberty Mutual and Hoffman Estates, Illinois-based Helmsman Management Services LLC.

Insurers also should talk with workers comp policyholders to mitigate the likelihood of future claims by ensuring that the employers communicate with employees to prevent them from entering unsafe facilities because if they are injured it “probably would not be a deniable claim,” Mr. Koziatek said.

“From a workers comp standpoint, you don’t want employees around or near facilities” when a storm hits, he said.