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Rise in comp claims severity hits construction

safety check

LAS VEGAS — While claim frequency in workers compensation has been flat for a decade, claim severity is increasing, and no industry is seeing it more than construction, according to a panel of experts. 

“This is driven by medical advances,” said Mark Walls, vice president, communications & strategic analysis, for Safety National Casualty Corp. “They’re getting better treatment; they’re getting a medevac helicopter to a level one trauma center.” 

Accidents that previously resulted in fatalities are now leading to prolonged medical treatment and rehabilitation, he said during a session at the 42nd International Risk Management Institute Inc. Construction Risk Conference.

“We have seen in our data set a 30% increase over the last three years of claims worth over $10 million,” said Chicago-based Mr. Walls. 

He joined other panelists discussing workers comp issues facing the construction industry, including claims severity, labor force challenges and marijuana legalization. 

While some challenges are ongoing, and difficult to quantify, injury severity in construction — where worker accidents are often more catastrophic than in other industries — is leading to a rise in high-dollar claims. 

As an example, amputations — comparatively common in the construction industry — used to cost much less when a $5,000 prosthetic was commonplace, Mr. Walls said. Now, with technological advances that provide more function for an amputee, costs can rise to $40,000 for a device that is not as durable as a traditional prosthetic.

Another example common in the construction industry involves those who are paralyzed as a result of accidents, he said. The traditional life expectancy for such injured workers had been a decade and can now be three times that long, he said.

“The medical science here is amazing,” he said. “But there are costs. These big claims are getting much, much bigger, and unfortunately these are the types of claims that you often see in your industry.”

Meanwhile, claims frequency in construction has remained 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 in Boca Raton, Florida. 

The generally flat trend helps offset rising costs related to severity, and it’s why the construction industry should continually focus on workplace safety, she said.

Safety “is the fuel behind the long-term frequency decline,” she said, when questioned about technological advances making workplaces safer, such as wearables that alert workers of hazards. 

Panelists also addressed the challenge of finding qualified, experienced workers and what it means in terms of injury risks.

“Data shows that there tends to be a higher accident frequency rate for the newer workers,” Mr. Walls said. “The other concern becomes if you don’t have enough workers, your people are having to do more with less; they’re working longer hours. That can lead to overexertion and chances of injuries occurring.” 

The aging workforce is another challenge, as such workers tend to take longer to heal and can have comorbidities that complicate their recovery, Ms. Glenn said.

The potential effect 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 bar drug testing in some cases.

Mr. Walls noted that legislative efforts are underway regarding the legalization of other drugs. Colorado, for example, just legalized hallucinogenic mushrooms. 

“This is a huge 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 blanket post-accident drug-testing program for fear that workers will not report accidents and injuries out of fear.