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Rich Ives is vice president of business insurance claims for Travelers Cos. Inc. Based in Hartford, Connecticut, Mr. Ives manages the workers compensation sector for Travelers, which is among the largest comp insurers in the country. He spoke with Assistant Editor Louise Esola recently about issues facing the industry. Edited excerpts follow.
What are some of the issues with inflation and its effect on workers compensation?
Overall, severity in the workers compensation line has been benign, especially in the medical space. There are reasons for that; there are mechanisms in the workers compensation system that help to control for significant medical inflation, with the largest of those being fee schedules. We know in the industry that fee schedules help to control the increasing medical costs involved with treating injured workers. Those are updated annually, which does slow inflationary impact on work comp medical costs. We do, however, believe that inflation in the workers compensation line will become a bigger concern in the future. There are five states particularly without fee schedules, and we do see a higher rate of medical inflation in those states currently, the reason being there are fewer controls in those states to manage the cost of treatment for injured workers. And we believe those same cost pressures that exist in those states will eventually work their way into the scheduled states over time.
Changes in the workforce are also a concern for the industry. What are some of the elements you are seeing?
We see a large portion of workers compensation losses coming from individuals who are new in their role. According to our most recent injury impact report for 2023, which we are releasing this week, we found individuals while they're in the job the first year, regardless of their age or their industry experience, represent 34% (of claim activity) … and accounted for nearly 7 million missed workdays due to an injury. The other thing that is a key speaking point for us here is age can also be a factor, meaning that those that are injured less often than any other age group are those aged 60 and older, because it's a smaller portion of the workforce. But we are seeing an aging of the workforce. Employees aged 60 and older had higher average costs per claim, totaling nearly 15% more than employees between the ages of 35 and 49, and approximately 140% more than those ages 18 to 24.
Mental wellness is also a concern. How has this affected comp claims?
Mental wellness in the workforce continues to deteriorate, with employees struggling with issues such as anxiety and depression. We know from our data that factors unrelated to an individual's injury, such as fear and unrealistic expectations or their lack of sleep or minimal social support, can extend the recovery process. It can extend the recovery process by up to 50%. We also found that 40% of injured employees who are missing time from work experience one of these types of psychological or social barriers to recovery.
How is the industry managing this?
Some of this is not related to the work or to the injury. We're not going to pay for the treatment to treat those issues. But what we will do is provide helpful supports and aids to mitigate those issues, because it has an impact on the overall outcome. A good example would be, if we know someone's struggling, sometimes it's just knowing that and providing a little more empathy in the way we are working with that individual. And that involves talking or frequent touch points, or maybe it's a virtual visit, for example. It's being able to really understand that individual in their circumstance.