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Claims Development for COVID (Part 1)

The latest Out Front Ideas With Kimberly and Mark webinar brought together a panel of industry experts to explore current trends being seen in COVID-19 claims, as well as long-term medical complications and what risk managers should be monitoring in the future. 

Our guests were:

  • Teresa Bartlett, MD – senior medical officer, Sedgwick
  • Max Koonce – chief claims officer, Sedgwick
  • Tim Stanger – vice president – partner relations, Safety National
  • Alex Swedlow – president, California Workers’ Compensation Institute

One of the most significant challenges in analyzing workers’ compensation data is that a single data source that collects and analyzes all the data does not exist. Data is currently provided through multiple sources such as the National Council on Compensation Insurance (NCCI), independent bureaus, monopolistic jurisdictions and self-insured employers. The California Workers’ Compensation Institute (CWCI) and the Workers’ Compensation Research Institute (WCRI) also provide analyses around workers’ compensation data.

To fill in some of the major gaps in data, panelists from CWCI, Sedgwick and Safety National break down their individual data sources to provide a clearer picture of COVID-19’s impact on workers’ compensation.

CWCI Claims’ Data Trends

In tracking the various components of COVID-19, CWCI has developed studies and on-demand webinars that cover the history of presumption laws, early adjudication decisions and how the industry leveraged telemedicine as a response to shelter-in-place initiatives. In addition, webinars are now available regarding legislation. When developing early COVID-19 models, essential elements were considered, including:

  • Infection rate
  • Symptomatic/asymptomatic rates
  • Hospital admissions
  • Intensive care admissions
  • Mortality rate
  • Cost per claim

Early projections related to COVID-19 claims were skewed based on a lack of stability in data modeling. The earliest data contained areas like China, Iceland and Greenland, with infection rates that were much different than other parts of the world. Once data became available regarding COVID-19 in the U.S., it was clear that the U.S. held a disproportionately large percentage of worldwide infection rates and deaths. 

California alone currently accounts for 13% of U.S. infections and 9.6% of U.S. deaths. When studying workers ages 18 to 65 in California, they account for 78% of the state’s infections and 26% of the deaths. However, when looking at the number of workers’ compensation claims in the state, only 4.7% of infections and 5.6% of deaths have an accompanying claim.

As of January 2021, there have been 123,674 COVID-19 workers’ compensation claims reported. Projections show about 143,432 claims expected through the end of January 2021. Reported claims from March 2020 to January 2021 show a 12% drop in all non-COVID-19-related claims. However, projections show that by the end of January the overall decrease in claims frequency will be around 4%, with almost 20% of all claims being COVID-19-related.

See also: 9 Months on: COVID and Workers’ Comp

The occupational characteristics of COVID-19 claims have changed with the fall wave of the virus. From October 2020 to January 2021, the healthcare industry share of claims dropped around 10%, accounting for around 29% of all COVID-19 claims. First responders have seen minimal change over the year in terms of their percentage of the total claims. Claims for the transportation sector doubled in the fall, now accounting for 8% of COVID-19 claims. Skilled nursing facilities still share a significantly higher percentage of COVID-19 claims in health care. 

Safety National Claims’ Data Trends

As a leading provider of excess workers’ compensation for self-insured entities, Safety National has seen that around 50% of its accounts consist of three industries: public entities, health care networks and education. Self-insured data is missing from bureau analysis, making Safety National’s data unique.

Consistent with CWCI’s data, overall workers compensation claims for Safety National clients dropped around 26% in 2020 compared with 2019, excluding COVID-19 claims. When including COVID-19 claims, the drop is around 10%. There were roughly three peaks throughout the waves of COVID-19, including early April, early July and early December, with the December peak being the highest number of claims seen all year. 

By age, the 20-55 bracket accounted for 84% of Safety National claims, with the average claim cost being $4,300. When looking at workers over age 55, the average claim cost was more than three times higher at just under $15,000. 

63% of death claims were age 56 or older, 43% were between the ages of 56 and 66. 61% of deaths were male. 51% of death claims were in healthcare, and 22% were from municipalities (mostly first responders).

Among the COVID-19 claims with an incurred cost of over $100,000, 15% have incurred more than $1 million. Some claims have over $2 million incurred, including organ transplants, long intensive care stays and even paraplegia caused by renal failure. 

Sedgwick Claims’ Data Trends 

Sedgwick also carries many self-insured accounts, with 24% of its business being in the retail sector. Like the rest of the industry, Sedgwick’s claims also saw high volume during the three peaks of infection rates. Although healthcare only represents 11% of all of the company’s accounts, most COVID-19 claims were reported from that sector, accounting for just over 50% of all reported COVID-19 claims. The retail industry and the public sector round out the top three industries reporting COVID-19 claims. The top five states reporting COVID-19 claims are California, Texas, Michigan, Florida and Illinois. 

When it comes to the severity of the claims, Sedgwick created a model to project where claims would fall, grouping claims into buckets, including:

  • Cases that only required quarantine 
  • Cases that required nominal medical treatment
  • Complex moderate cases 
  • Complex severe cases, requiring ICU
  • Fatalities

These severity groupings have closely trended with original predictions, with fatalities, for example, accounting for just over .5% of all claims. Approximately 1.5% are severe cases involving ICU stays, 8% are moderate cases involving several medical treatment visits and 90% are mild cases involving very little medical treatment. When reviewing these claims’ value, 73% are valued under $5,000, and 85% are valued under $10,000. 

See also: 20 Issues to Watch in 2021

There has been a fairly even distribution of claims among the age groups due to various industries’ claims. However, the more severe claims that include ICU stays are trending in the over-60 age group. The healthcare industry is accounting for a higher rate of hospitalizations than the other industries, trending 3% to 4% higher than the rest.

Overall, Sedgwick saw a decrease in workers’ compensation and liability claims across the country due to economic shutdowns and various employers not operating at full capacity. Even retail clients deemed essential saw a decrease in overall claims, which could be due to a lower customer count within the stores and an overall increase in safety measures. There has been a slight increase in work-from-home claims due to ergonomic-related issues.

To listen to the archive of our complete COVID Claims Development: Workers’ Compensation & Beyond webinar and view a full list of FAQs from this session, please visit https://www.outfrontideas.com/.Follow @outfrontideas on Twitter and Out Front Ideas With Kimberly and Mark on LinkedIn for more information about coming events and webinars.

9 Months on: COVID and Workers’ Comp

The COVID-19 pandemic has been with us for over nine months now, with no end in sight. During this time, we conducted several Out Front Ideas COVID-19 Briefing webinars and The Path Forward virtual conference. These educational events were designed to provide risk managers and others in the industry with a better understanding of how COVID-19 was hitting our industry. As more time passes, the impact on workers’ compensation is becoming more evident. However, we are still in the early stages of developing claims, and it will be some time before we have clarity on the full impact.

What has changed? Frankly, everything—how the industry handles claims, the types of claims submitted, how medical treatment is provided, staffing models, and the list goes on. Today’s workers’ compensation is different from what it was before the pandemic started, and it is not likely to revert to the exact model we had before March 2020. 

Defining Workers’ Compensation

First and foremost, the definition of a workers’ compensation claim has been fundamentally changed. When workers’ compensation started over 100 years ago, it was to cover traumatic workplace accidents, things that happened at a specific date, time and place. 

Over time, workers’ compensation expanded to cover occupational diseases. These diseases could be traced to exposures that were particular to the workplace and associated risks — a chronic disorder caused by work activities or environmental conditions in the workplace. In many states, workers’ compensation expanded to cover injuries occurring gradually. As a result, repetitive trauma/continuous trauma claims are now a significant cause of injuries and workers’ compensation claims in some states. 

Front and center today are infectious diseases. Workers’ compensation was not designed to cover a global pandemic. But claims for an infectious disease could be covered under workers’ compensation if there was an increased risk due to employment, and there was documentation of exposure and a diagnosis. Tens of thousands of workers’ compensation claims for COVID-19 have been covered nationally under this standard. And now we have states enacting presumptions that COVID-19 is work-related for specific occupations. These presumptions fundamentally change one of the basic tenets of workers’ compensation, the burden of proof. Typically, the affected employee would be responsible for proving that exposure happened in the workplace and that the employee is at higher risk for exposure than the public. With presumptions, employers are left responsible for proving that exposure did not occur in the workplace, which can be extremely difficult.

With these changes, one of the more frequently asked questions in the industry is, does COVID open the door for future infectious disease coverage under workers’ compensation? We participated in a Southern Association of Workers’ Compensation Association (SAWCA) regulatory roundtable discussion earlier this year, and the consensus from the panel was, yes, that door is now open.


Workers’ compensation is a statutory coverage. Carriers cannot exclude specific causes of loss like other insurance coverages can. After the 9/11 terrorist attacks, the reinsurance market responded by excluding terrorism from workers’ compensation treaties. Now we see reinsurers exclude infectious disease and pandemic from coverage. Because the carriers writing the coverage cannot exclude that risk, carriers are left exposed to unlimited liabilities. There has been talk of a federal pandemic reinsurance program, similar to the Terrorism Risk Insurance Act (TRIA) with terrorism. But those talks are very preliminary. 

See also: Companies’ Biggest Unrecognized Risk


Tied closely to the workers’ compensation industry is employer payroll. Fewer people working means fewer premiums, and the payroll in certain sectors is down significantly. The question is, when will this bounce back? Recently, the CEO of one of the largest hotel chains in the world said it would be at least 2023 before the company returned to 2019 occupancy levels. Major airlines are predicting decreased demand through at least 2022. 

But the impact is going beyond the travel industry. As many office buildings around the nation remain mostly unoccupied, all the ancillary businesses around those buildings are affected — restaurants, retailers, dry cleaners, parking garages, etc. Brick and mortar retailers that were already struggling are facing an increasing challenge. Thousands of businesses will ultimately close forever. 

When will the economy bounce back? When will we see 2019 employment levels again? Those are two huge unknowns facing the workers’ compensation industry. 

Claims Volume

Because fewer people are working in some industries, there are fewer claims. In April 2020, third-party administrators (TPAs) reported that their claims volume was down close to 50%. While that volume is bouncing back, it remains below 2019 levels. 

This decrease in claims hurts all workers’ compensation industry vendors that depend on volume, including TPAs, medical networks, medical providers, case managers and even defense attorneys. This reduced revenue may eventually lead to more industry consolidation. 

Not all claim volume is down. First responder claims are increasing more than ever before, with both the pandemic and civil unrest resulting in thousands of new injuries. Healthcare industry claims are up, as well. Some retailers, including supermarkets and big box stores, have expanded their payroll to keep up with demand. Trucking, shipping and delivery businesses have also expanded payrolls. 

Catastrophic injury claims have not decreased during the pandemic because the types of industries where there are higher incidences of such claims have kept working, such as construction, trucking and public entities. Violent attacks against first responders have also increased with the civil unrest around the nation. 

Data Accuracy

The foundation of the insurance industry is the law of large numbers and predictability. Years of accumulated data is analyzed by actuaries to determine the expected claims for the future. How has COVID-19 changed this? Unquestionably, there has been delayed medical treatment and extended disability on existing claims. The big question is, to what degree? It will take years for this change to flow through actuarial development triangles.

The pandemic has likely affected the benchmarks you used to measure your workers’ compensation programs. Employers need to reset their starting point when evaluating the effectiveness of their loss prevention and claims handling programs. 

COVID-19 Claims

As time passes, we are starting to understand better the types of claims the industry is seeing from COVID-19.

Safety National’s data shows the most affected industry group, as expected, is healthcare. However, closely behind healthcare is first responders, with police officers, firefighters and paramedics. According to the National Fraternal Order of Police, 247 law enforcement officers have died from COVID-19 through the end of October. The public entity piece is missing from the bureaus’ analysis because most of these entities are self-insured.

At this time, Safety National’s data also shows that the total number of death claims reported for employees below age 55 is almost the same as for employees over age 65. However, there are 48 times as many claims in the under-55 age group.

Sedgwick has handled over 45,000 COVID-19 workers’ compensation claims for clients. 78% of those are closed, with an average paid of $1,050. 54% of the claims had no payments made. 

Healthcare accounted for 57% of Sedgwick’s COVID-19 claims, with public entity, retail, services and food/beverage rounding out the top industry groups. 

Sedgwick claims show almost an equal distribution of claims by age group between 30 and 40 years old, up to over 60 years old. However, the average incurred in the over-60 age group is close to double any other age group. Over 71% of the death claims were for employees 51 or older. 

Overall, most of the COVID-19 claims by the workers’ compensation industry are relatively minor. However, death claims and claims with extended ICU hospital stays can have total incurred values over $1 million. 

One big question is, how will these claims develop? Will we see continued medical complications develop? Will we see permanent partial and permanent total disability claims?

See also: 4 Post-COVID-19 Trends for Insurers

The Path Forward

One way in which the workers’ compensation industry has adapted to the pandemic environment is with the increased use of telemedicine. Sedgwick still sees telemedicine on over 10% of claims. Before COVID-19, telemedicine utilization was on less than 1% of claims. 

Return to work has been a more significant challenge with business restrictions, which could increase costs on existing claims. Sedgwick data showed a 21% increase in TTD paid on active claims from March-September compared with 2019. 

Finally, carriers have to develop new models to estimate their potential exposure to future pandemics. Without question, COVID-19 will continue to affect the workers’ compensation industry significantly into 2021 and beyond.

Kimberly George with Sedgwick and Mark Walls with Safety National host the “Out Front Ideas” educational series. You can view their archived sessions here.

Strategies to Reopen Your Business Safely

As states reopen, businesses will have to grapple with the challenges of creating a safe environment for both workforce and consumers. Employers have to address a range of issues, like how to mitigate workplace transmission of COVID-19, what workforce challenges to prepare for and how to demonstrate to consumers that they can safely shop at the business.

I enlisted the help of the following three public health experts to discuss best practices for reopening businesses safely:

  • Dr. Scott Benson — associate professor, Division of Public Health and the Division of Infectious Diseases | University of Utah
  • Dr. Steven Lacey — professor and chief, Division of Public Health | University of Utah School of Medicine
  • Dr. Kimberley Shoaf — professor and associate chief, Community Engagement | University of Utah

Facility Hazards

Water intrusion and mold. If a building has been left unattended or with a skeleton crew, water intrusions may go unnoticed and result in mold growth. A certain amount of heat load is typically expected with people in the building, and, without it, water and lack of heat can contribute to mold. 

Water systems. Most large buildings have cooling towers and other evaporative cooling systems. With water not circulating in these systems, naturally occurring legionella bacteria can grow. Turning systems back on can create exposure to the bacteria. Talk to facilities personnel about purging and disinfecting water systems before reactivating. 

HVAC systems. Higher ventilation rates, zone pressurization of fresh air and systems that run longer can help protect employees. Talk to the building manager about optimizing airflow patterns and directional flow to keep contaminated air away from employees. Enhancements such as upgrading to MERV-13 filters to capture viral particles, ensuring that relative humidity ranges between 40% and 60%, will further control exposures to the virus. 

Cleaning and disinfection. Despite the use of these terms interchangeably, there is a significant difference between the two. Cleaning uses a detergent to remove dirt physically from the surface but does not kill all germs. Disinfection is the destruction of those germs at a high percentage, rendering them incapable of reproducing. For guidance on the most effective disinfectants in fighting the SARS-CoV-2 virus, refer to the EPA’s List N

Preparation for a Returning Workforce

Establish an Infectious Disease Preparedness and Response Plan. Characterize potential routes for exposure, task-specific risk factors, available control strategies and a plan for communicating expectations with employees and customers.

Follow location-specific guidelines. Use resources like federal, state and local guidelines to determine the parameters for your office’s readiness. States vary significantly in terms of their guidelines for reopening, so, if you have locations across the nation, be aware of the differences. Some locations will require a smaller percentage to return to a physical workspace, so have a phasing plan prepared.

See also: Firms’ Priorities During Pandemic  

Understand employee risks. Exposure potential will vary greatly depending on job type and other factors. Follow CDC guidelines, and communicate with your HR team to understand which individuals may be at higher risk. 

Know how to handle a sick employee. If someone comes to work sick or falls ill while at work, you need to have a plan to safely isolate and move them out of the workplace while maintaining their confidentiality. Provide onsite responders with the appropriate training and personal protective equipment (PPE) to protect them from potentially sick employees. 

Understand changes to sick leave policies. The Families First Coronavirus Response Act (FFCRA) extends coverage under certain circumstances for employers with fewer than 500 employees but more than 50. If your organization is not a part of the FFCRA coverage, flexibility with paid sick leave and extended family and medical leave is crucial to your response. 

Prepare your communication strategy. Communicate your pandemic response to your employees and the general public. Use resources like social media channels, call centers, text messages, emails and recorded video messages to make your response widely known.

Protecting the Workforce and Consumers

Worker social distancing. For this to be effective, you need compliance from your workforce. Communicate with your employees why it is critical to protect their health as essential members of the business. The goal should be to enable a minimum of six feet of space between individuals. To make it easier to comply, create gender-neutral and single-occupancy bathrooms and close off common gathering areas. 

Consumer social distancing. Just like with your employees, communication with consumers is key to the effectiveness of social distancing. Use passive prevention through design and engineering controls, like arrows on flooring and easy-to-read guidance. Use preferred mechanisms like contactless delivery and curbside pick-up. Separate your entry and exit with barriers between them, directing traffic away from each. Create physical barriers (cough and sneeze guards) at high-contact points, like checkouts and drive-thrus, and limit credit card or cash transactions and encourage no-touch checkouts.

Personal protective equipment (PPE). Providing necessary PPE to your workforce is crucial to their safety, but it is essential to understand the different types. N95 respirators protect the wearer and should be reserved for healthcare workers at the highest risk of exposure because they are in short supply. Surgical masks protect those around the wearer and are generally used by healthcare workers and other frontline workers at higher risk of exposure from their job. Cloth face coverings help slow the spread of the virus, and the general public is encouraged to wear these. 

See also: Access to Care, Return to Work in a Pandemic  

Hand hygiene. Make it easy to maintain hand hygiene by stocking paper towels in the bathroom, keeping a trashcan close to the door to discard paper towels and making hand sanitizer readily available. 

Employee education and communication. Provide your employees with the information they need to comply with guidelines. Ensure all information complies with OSHA guidelines and is consistent. Explain the benefits to your employees and consumers.

To listen to the full Safety National webinar on this topic, click here. View the complete library of Safety National’s webinar topics here.

Workers’ Comp Issues to Watch in 2019

We kick off 2019 by discussing 20 issues the workers’ compensation community should be monitoring. Our list includes both employee benefits and workers’ compensation issues, as these two areas inevitably overlap. Later in the year, several of these topics will be developed into individual “Out Front Ideas with Kimberly and Mark” webinars.

Just because an issue is not on our list does not mean it’s not important. Our goal is to highlight issues that we feel need more attention. Thus, while opioids are an important issue, we do not discuss them here because they are already receiving tremendous national attention.

Healthcare 2020

Two years into this administration, the Affordable Care Act remains the law, although lawmakers and the administration have reshaped parts of it through legislative, regulatory, budgetary and legal actions. Healthcare was a leading campaign conversation during the midterm elections in 2018, and expect it to top the list in the 2020 presidential election..

As of Jan. 4, all but 14 states have adopted Medicaid expansion. This is something we expect to continue into 2019.

Addressing the cost of prescription drugs will be a priority in 2019. While we are a long way from bipartisan consensus on how to address the pricing challenges, big pharma is bracing for smaller, but significant, regulatory changes.

Finally, physician-led accountable care organizations (ACOs), have continued to do well and are likely to increase in 2019. ACOs reward providers for desirable patient outcomes.

Legislative Watch

The 2018 elections may have a big impact on the workers’ compensation landscape in 2019.

There were eight states where the party of the governor changed in the November 2018 elections. Many do not fully appreciate the impact this can have on workers’ compensation, however, these governors appoint the workers’ compensation regulators and administrative law judges. These positions have a very significant influence on the practice of workers’ compensation in their respective states.

In 2018, there were over 100 national bills introduced to expand presumptions for first responders. Many of these bills pertained to post-traumatic stress disorder. We expect a similar trend this year. One newer area of emphasis that we expect to see is a push to continue death benefits for surviving spouses of first responders after remarriage.

In terms of specific states, we are closely monitoring the following for potential workers’ compensation legislative activity in 2019.


Bills to erode costs savings provisions in the workers’ compensation statutes pass the California legislature every year. The question is: Will incoming Governor Newsom veto those bills like the past two governors did? Governor Newsom is also very focused on creating universal healthcare for California residents, which could have a significant impact on workers’ compensation.


The Democratic Illinois legislature and Republican Gov. Rauner battled for his entire term over workers’ compensation. What will happen when Democratic Gov. Pritzker takes office?


In May 2017, a circuit judge ruled that Alabama’s workers’ compensation statutes were unconstitutional because of the caps on weekly benefit and attorney fees. Since then, a bipartisan task force has been working to develop reforms to workers’ compensation statutes that would address the areas that the judge felt were unconstitutional while, at the same time, preventing significant cost increases for employers. It remains to be seen whether legislative action on the task force recommendations will happen in 2019.


With the solvency of Social Security being a significant concern for the federal government, we have been waiting for Social Security to start looking into potential shifting from state workers’ compensation programs to their program. This appears to be happening now. There are currently 15 states that have a “reverse offset” allowing workers’ compensation benefits to be reduced if the person is receiving both Social Security Disability (SSDI) and workers’ comp. In all other states, SSDI gets the offset. Legislation could quite possibly take away this reverse offset.

See also: Why So Soft on Workers Comp Fraud?

Psychology of Pain

Treating pain is much more complicated than prescription medication and physical therapy. Pain has biological, psychological and emotional factors — often approached through what we refer to as the biopsychosocial approach to pain or the biopsychosocial model. When patients focus on pain, pain worsens. Anxiety, fear and a sense of loss of control contribute to pain. Research shows treating anxiety and psychological support reduces pain and the use of pain medication. And while we know that the psyche has a tremendous role in pain, few patients receive treatment for the emotional and psychological aspects of pain.

Worldwide, the need for more effective pain treatment has led the pain treatment community to promote comprehensive treatment of pain and multidisciplinary pain care. Unfortunately, access to skilled providers and comprehensive pain care is a challenge in many parts of America. In addition, receiving payer approval for care is equally challenging.

Understanding a patient’s response to pain earlier in the claim offers an opportunity to create a meaningful, holistic treatment plan. If the initial pain assessment reveals the patient has a high level of subjective pain complaints with limited objective findings, there is a likelihood the patient will end up in chronic pain in the future.

Here are a few suggestions to consider regarding the psychology of pain and workers’ compensation:

  1. Create a pain philosophy as part of your claims program. Engage the entire cross-functional claims team in the development of the program, including claims, clinical, legal, employer, occupational and orthopedic providers. The pain philosophy and associated documents become part of the client service instructions.
  2. Implement pain assessment tool(s); initial and continuing assessments are available
  3. Outline care pathways for holistic pain treatment
  4. Because patient-centered care is key to success, communicate clearly and often with the injured worker, Transparency and empathy are important.
  5. Identify a pain psychologist or clinical pain expert to consult, as needed, on pain cases and help guide the more complex cases
  6. Create a feedback loop or grand rounds approach to bring stakeholders together on a regular basis and assess the pain philosophy, outcomes and opportunities for improvement.

Politics of Permanent Impairment

When the AMA 6th Edition Impairment Guidelines were issued, experts hailed them as a significant improvement in the evaluation of physical impairment. But they have also led to litigation around the country as plaintiff attorneys challenge the constitutionality of the guidelines because they can produce lower impairment ratings.

This leads to the question that states need to be asking: What is the purpose of the impairment guidelines in their state? If the purpose is to provide a measurement of objective physical impairment, then the AMA 6th Edition is the best tool for this. But, if the purpose of the impairment rating is to provide a PPD award that considers more than just objective impairment, then the AMA Guidelines alone are not the proper tool. The AMA Guidelines measure physical impairment, not loss of access to the labor market, potential loss of earning capacity or other subjective elements that have nothing to do with recovery from the physical injury.

Social Determinants of Health

In patient care, addressing social determinants of health is as important as the quality of the care that a patient receives. Social determinants of health are the conditions in which people are born, live, work, play, worship and age that factor into overall health. Social determinants of health include socioeconomic status, education and literacy, access to healthy foods and health services and social and physical environments. Increasingly, payers and health care providers are interested in more holistic care, with the goal of improving health outcomes.

Economy’s Impact on Workers’ Compensation

We are at record low levels of unemployment, and wages are climbing. Higher employment and wages mean higher payroll. Higher payroll leads to higher workers’ compensation premiums.

Higher employment rates also mean we have more workers in the workforce who are not adequately trained and may not be in good physical condition. Because of this, some carriers are starting to notice a slight uptick in accident frequency rates. It will be interesting to see the data presented at the 2019 NCCI Annual Issues Symposium to see if we are, indeed, starting to see an increase in frequency rates.

Twenty states increased their minimum wage as of Jan. 1. Higher wages could lead to more payroll and associated premiums. In addition, in states with a wage loss benefit, a higher minimum wage means decreased wage loss awards.

Employee Health Models

Benefits continue to be a talent attraction and retention tool for employers. Chief human resources officers understand that the health of an employee is directly related to productivity. The health and wellbeing of the employee population lead to productivity and, in turn, directly correlate to top- and bottom-line performance of the organization. Employee health models are evolving with employer-purchased care. This is happening because health insurers are not negotiating and managing costs in a way that employers can manage models directly.

Direct primary care (DPC) is a small, but fast-growing, movement of doctors who do not accept insurance and, instead, charge a monthly membership fee. Employers engaging direct primary care believe in the primary care health model from a treatment perspective and care coordination. Doctors have the incentive to prioritize prevention and provide high-quality, coordinated care. It is a cost-effective, value-based care model that avoids the fee-for-service traditional pricing model.

The National Business Group on Health estimates that over 50% of employers report having some form of value-based care in their health insurance program. Although we are hearing more about value-based care in workers’ compensation, be mindful of the difference between bundled pricing and value-based programs. “Value-based” care should have a quality care component and cost factor. “Bundled pricing” is a cost savings model.

Telemedicine is common in employee health benefits today. Over 95% of large employers offer telemedicine solutions. While adoption varies, consumers who use telemedicine typically report a high level of confidence and satisfaction in their care.

Mega Claims and Rates

Industry data reports that the number of claims over $5 million incurred is increasing, and the size of individual claims is also increasing. It was not that long ago that a $5 million claim was a rarity, and catastrophic injury claims tended to top off around $10 million to $15 million.

However, a combination of factors are leading to the increase in these numbers, including accident survivability, an increase in auto accident frequency and advancement in medical treatment. Carriers are now seeing individual claims as high as $40 million, and these long-tail costs have a significant impact on premium rates.

In terms of forecasting workers’ compensation premium rates for 2019, overall the outlook is that rates will remain fairly flat, with some states seeing slight rate decreases. However, both A.M. Best and Fitch have cautioned that increasing medical and litigation costs are eroding workers’ compensation carrier combined ratios and that 2019 will likely be closer to a break-even combined ratio than the last three years. If the data, ultimately, shows that accident frequency is increasing, that would be another factor that would affect the marketplace.

Leave of Absence

State and local laws, the talent war and employee expectations are leading more employers to implement leave-of-absence programs. Employers offering paid leave report that the benefit helps with employee retention and reduces costs related to turnover and employee training. Another contributing factor to leave policies is the federal Tax Cuts and Jobs Act of 2017, which contains a tax credit for employers that provide qualifying types of paid leave to full- and part-time employees.

As more leave programs exist, the coordination of leave administration with job accommodations and workers’ compensation continues to be an issue to watch.

Impaired Workforce

As we enter 2019, legal marijuana is more available than ever. In October 2018, recreational marijuana became legal in Canada. After the November elections, there are now 10 states and the District of Columbia with legal recreational marijuana.

In 2019, state legislatures in Connecticut, Illinois, Minnesota, New Hampshire, New Jersey, New Mexico, New York, and Rhode Island are all expected to consider legalizing recreational marijuana.

What does all this mean for employers? Some percentage of your workforce is possibly impaired at work. The challenge for both employers and law enforcement right now is that the science of marijuana has not caught up to the social reality of legal marijuana. There are no widely accepted standards or standardized tests to determine if someone is impaired from marijuana.

Talent Training and Development

As an industry, we are experiencing an unprecedented amount of turnover due to the aging workforce. With turnover comes the need to train and prepare the next generation of claims handlers. It is important that we carefully examine training programs to ensure that they are adequately preparing people with the necessary skill sets to handle claims. Not only are statutes and rules important to learn, but soft skills are more important than ever. Rules and regulations are trained consistently, and system training is extensive, but soft skills training is lacking and, often, absent.

Workplace Violence

Workplace violence continues to get worse. We are not talking about mass shootings, which are rare. Instead, our focus is the day-to-day threat of violence faced by many workers.

Physical assaults on the job are a growing problem in many industries – especially healthcare, K-12 schools and retailers. Most are not aware of how bad the problem is becoming because it is not widely reported. Some workers feel the violence is part of the job, so they don’t report the incidents. In addition, businesses and schools don’t want customers and the community to think they are unsafe, so they don’t talk about the problem.

We cannot begin to fix the problem of workplace violence until we acknowledge the extent to which it is happening and talk about the societal causes of the behavior. This is a very complex problem for employers.

Unconscious Bias

In recent years, the discussion of diversity and inclusion has become mainstream. Conferences and conference sessions on the topic flood our inboxes, and many of our organizations have hired diversity officers. While the discussions are important and meaningful, we also must spend time digging into ways that we can train our staff to be more inclusive. One such way is to tackle the topic of unconscious bias.

Unconscious biases are learned stereotypes that are automatic, unintentional and deeply engrained in each of us. Because many of these prejudices exist beyond the conscious level and are a result of being brought up in a culture that harbors biases, we must first acknowledge that they, in fact, exist. Simply learning about our hidden biases is not enough. We must train colleagues to identify these biases and build skills to overcome them.

Employee Classification

The determination of whether a worker is an employee or an independent contractor is a challenge that has been around since the start of workers’ compensation. This issue is getting more attention now because of the gig economy. States and the U.S. Department of Labor are very focused on this issue.

This is a very complicated problem for employers. The rules regarding what constitutes an independent contractor not only vary by state, but “independent contractor” can also be defined differently under a state’s workers’ compensation than under wage and hour rules. In addition, IRS definitions of independent contractor are often different than the state regulations.

The Sharing Economy

When we speak of the sharing economy, organizations like Uber, Lyft and AirBnB come to mind. However, the biggest potential impact of the sharing economy in workers’ compensation comes in the form of data.

Larger companies used to have a tremendous competitive advantage because they had access to so much more data, which enabled them to make more informed decisions. However, many insurtech companies are data aggregators, gathering information from multiple sources and compiling it into something useful that can be analyzed and acted on. The wide availability of data is a benefit to startup and smaller companies because it can help to level the information playing field. More data enables better analytics and better decision-making.

Globalization of Risk Management

We live in a global economy and, as a result, risk management is becoming more globalized. Employers with operations in multiple countries are well aware of the challenges associated with globalization, including complying with a growing number of laws and regulations. However, even businesses that do not have physical operations in other countries can be subject to international laws and regulations if they have an online presence or work cowith vendors in other countries.

See also: How Should Workers’ Compensation Evolve?  

The Consumer Experience

Organizations placing a high priority on consumer experience and engagement are changing the way they create and design products, address customer service issues and measure experience and engagement across stakeholders. These organizations often discuss design thinking as a strategy for innovation. “Design thinking” involves internal and external stakeholders, satisfaction and engagement levels and efficacy and quality. How often do you find injured workers at a conference sharing their experience with the system and claims process? Do injured workers have a voice at the table regarding processes and communications in which they are involved? Would turnover and employee satisfaction improve for claims organizations if the claims adjuster had a central role in workflow and product design?

As we consider the future of work, talent attraction and retention, evolving from process to an empathetic engaging industry, we believe emphasis on the consumer experience is paramount to success.

Measuring Success

The adage, “what gets measured gets done,” is also true in the workers’ compensation industry. But the question becomes, are we measuring the right things?

We are excited to once again be moderating the opening panel at the WCI conference in Orlando in August. This session will be a discussion among employers, industry leaders and regulators on measuring success. What metrics are important, and what is obsolete? How can we drive the desired outcomes by adjusting the way we measure success? We hope you will join us in Orlando this August at the WCI conference for this session to hear what stakeholders think about this issue.

Future of Work

The future of work is an important conversation for all of us to consider in 2019. When you think of the future of work, what comes to mind? Machine learning, automation, technology, digital? How are our work cultures changing?

Employees today want to feel connected – connected to each other, connected to their community and connected to passions. Employees also want to perform purposeful work and to feel valued.

As workplaces evolve, our industry will also need to evolve to attract and maintain the workforce of the future.

Natural Disasters

Without question, we are experiencing more frequent and more catastrophic natural disasters than ever. Last year, we saw a record hurricane hit the Florida panhandle and wildfires in California destroy entire towns.

Disaster planning and response are an essential part of a risk manager’s job. However, the significant and devastating nature of the natural disasters requires evaluation of current risk management programs. Risk managers need to build in contingencies for contingent plans and need to factor in what would happen if there was a significant and lengthy disruption in your supply chain. We need to be thinking of the unthinkable and preparing for it before it happens.

To listen to the complete Out Front Ideas with Kimberly and Mark “Issues to Watch” webinar, which was broadcast on Jan. 8, please visit: http://www.outfrontideas.com/archives/

Workplace Violence: Assessment, Response

Workplace violence is a daily threat to workers in many industries. Aside from mass shootings, which grab headlines, more than 2 million workers are victims of violence every year.

The issue is a challenge for employers striving to maintain a safe working environment for their employees. By understanding the scope of the problem, the underlying reasons for violence and the types of violence that threaten specific industries and workplaces, organizations can make a significant impact on reducing incidents against their workers.

During a recent “Out Front Ideas with Kimberly and Mark” webinar, we had two prominent experts join us to discuss this very challenging issue:

  • Bub Durand, practice leader of medical group support services for Kaiser Permanente’s Northern California region
  • George Vergolias, PsyD, vice president and medical director for R3 Continuum

Scope of the Problem

OSHA defines violence as any act or threat of physical violence, harassment, intimidation or other threatening disruptive behavior that occurs at the work site. That includes everything from threats and verbal abuse to physical assaults and even homicide.

Many employers, however, are wary of even discussing the issue out of concern that people will view their particular companies as being overly violent. In fact, several potential speakers in retail and other industries we approached to join our panel declined for this very reason.

Despite their reluctance, we know that the workplace has increasingly become the site of violence, especially in certain industries.


Healthcare is the industry that generates more attention than any other with regard to violence – and with good reason. The most recent government statistics show there are 7.8 cases of serious violence per 10,000 employees, which far exceeds any other industry, and that number is likely much lower than the reality.

Many healthcare facilities, especially in high-risk areas such as emergency departments and Level I trauma centers, are routinely the sites of violent outbursts. Patients or their families attack providers all too frequently. Many of these workers have come to believe violence is just part of the job. Unfortunately, those in a position to change this often foster that culture. We may soon see an increase in the numbers of incidents reported, due to mandates for increased reporting, especially in California.


Mass shootings at schools have been getting lots of attention. However, not talked about is the fact that schools are increasingly the site of daily violence or threats by students against teachers and staff.

For example, one of the nation’s largest school districts reported a 10% increase in violence-related claims in the past five years. With incurred losses of $19 million, these claims represented 15% of the total and 12% of the system’s incurred losses. The numbers do not include many of the threats and harassment incidents, which often go unreported.

One reason for the increased number of violent incidents reported in schools may be the increased awareness of the issue and the potential for remedies, both legal and administrative. Another is the implementation of zero-tolerance policies that require or strongly recommend reporting. One more is the increase in kids acting on their emotions, more so than they did in past years.

Overall, workplaces have seen an uptick in homicide rates in recent years, even though the rate in the general population has decreased. Some experts speculate that may be due to increased stresses facing workers, such as financial pressures.

Social media may play a role in increased violence in the workplace, because it seems to empower some people to act in ways they normally would not. This sometimes spills over into real-world, face-to-face situations.

On a positive note, efforts to reduce violence in the workplace are paying off. While homicides among government employees increased 30% between 2003 and 2013, the rate decreased 30% in the private sector.

See also: Broader Approach to Workplace Violence  

Types of Violence

Developing violence-prevention programs requires knowing the type(s) of violence to determine the best approach. For example, gender may be part of the equation. Men are more likely to be killed at work during robberies, especially in retail establishments, while women are more likely to be victims of domestic violence.

Domestic violence is one category that is often not adequately addressed in the workplace. Many employers believe that, because the potential perpetrator is not an employee, he is not a threat to the workplace. Statistically, it is a very real problem that should be considered and included in violence prevention plans.

In fact, violence can be initiated internally or externally. It may be started by an employee within the company, or externally by a customer, former employee, vendor or someone connected with an employee.

There are also emotional vs. predatory incidents of violence. Knowing what drives each incident category is important to help prevent it.

  • Emotional violence generally occurs as a reaction to a threat or fear. An example would be two boys ready to duke it out in school. Neither actually wants to fight, but they also do not want to be humiliated, so they pretend they are ready. Diffusing this situation can be done by intervening and stopping both of them equally.
  • Predatory violence involves forethought, rather than being reactionary. A sniper is an example of predatory violence. Preventing these situations is much more complex.

Temporary States vs. Emotional Traits

Some attacks occur because the person is temporarily in a highly emotional state. It could be an emotional reaction, a psychotic episode or a drug-induced state. A permanent trait, on the other hand, means the person has a personality factor that is driving him to act in a demeaning or abusive manner. Those traits are more consistent and predictable over time.

An example of someone in a temporary state would be a father who has just been told his wife was killed and his child is in surgery following an auto accident, and he speaks very little English. His inability to fully communicate, and his efforts to see his son in the emergency room, could easily lead to a violent outburst. Security personnel might be inclined to handcuff the man, per protocol. However, such a situation can be diffused by understanding why he is acting the way he is and getting a language interpreter to speak with him calmly.

It is important to understand the context of the violence and not assign permanent traits to someone who is only in a temporary state. That can sometimes be tricky, especially if a zero-tolerance policy is in effect and mandates that security personnel handcuff any violent perpetrator. If someone is acting out in hostility, especially if it is atypical behavior for that person, asking questions can help prevent an incident. This can be especially effective in the case of students at school; pulling the person aside to find out what is driving his actions is often effective.

Assessing the Risk
There are many ways to determine the types and levels of risk to an organization.

  • Traditional assessment. One approach includes a traditional security risk assessment of the grounds, the physical security environment and the security practices and policies, using specific metrics and historical performance of law enforcement and risks in the local community as factors.
  • High-risk area assessment. As Bob explained, a new California law addressing workplace violence in healthcare has led Kaiser Permanente to conduct additional assessments of its facilities. One involves looking at high-risk areas, such as emergency rooms. The type of risks present there could include family members worried about patients who have been brought in, or patients left waiting because their injuries are not life-threatening, and they become impatient and agitated. These assessments look at the safety and physical security practices along with engineering controls.
  • Administrative and workplace controls. These focus on ways to distinguish employees from visitors. Kaiser Permanente, for example, requires workers to wear ID security badges from the waist up.
  • Employees’ knowledge. Part of assessing risk is to determine whether staff members know what to do at the first sign of a threat; do they know the security code to call, and what to expect as a response? Employees also are assessed to make sure they understand they may sometimes have to call in outside law enforcement and must know how to do that.
  • Physical layouts. A patient who presents a danger to himself and is brought in involuntarily needs to be placed in a safe room. The assessment would look for any dangerous objects in the area the person could use to injure himself. Staff members are quizzed to ensure they understand what needs to be removed from such an area.
  • Remote worker assessment. Many healthcare or hospice workers go to an offsite home or other location. Because the risks are often unknown in those environments, employees need to understand what to do. For example, the worker could ask whether there are any firearms in the home.

It is also important to assess both safety and security because they are different. Security would include a door in a particular location of the facility that serves as an exit, that visitors cannot enter. However, a worker who props the door open, even briefly, defeats the purpose. Employers need to promote a culture of safety within their organizations, as well enhancing security.

See also: New Idea for Active Shooter Incidents  


The best workplace violence policies mean nothing if people are not trained on them. Employees need to clearly understand what to do in a given situation. Training should be conducted at least annually and with any new hires, and employees should be given competence testing regularly. Staff members need to be clear on the expectations of security personnel or they increase their own risk of becoming victims of violence. Proper training also improves legal defensibility.

An important point to emphasize in training is to examine the threats to each particular work site and each specific area of a work site. While the same policy may apply, there may be different priorities depending on the risks and the employees. A one-size-fits-all approach should be avoided.

It is also important for the trainer to understand what the policy says before starting the training. A zero-tolerance policy is different from others. Unfortunately, some companies seek training before a policy is fully developed.

In addition to training staff on policies, management must adhere to it. Otherwise, they risk creating a toxic work environment if someone reports a concern that is ignored.

The trainer needs an adequate amount of time to perform effective training. It is imperative to make sure employees fully understand the policies and procedures.

Threat Responses

There are a variety of ways for employees to mitigate violent threats in the workplace:

  • Be aware. Being aware of the surroundings, how the worker is feeling and how the other person is feeling is important. The other person is likely feeling agitated, so the worker must be able to stay composed.
  • Understand/do not judge. Where possible, engaging the person can prevent a violent incident. Workers can try to find something they like or have in common with the person.
  • Explain the consequences and alternatives. Angry people are not thinking clearly. Nor are they thinking about how actions will affect their lives or families. Calmly explaining the ramifications can help.
  • Change the tone of voice. Speaking calmly to an agitated person may help reduce his anxiety.
  • Avoid provoking. Telling the person to “just calm down” could make him more angry.

The goal is to help redirect the person so he slows down and begins to think more clearly.