We all know that workers’ compensation insurance is a big deal for business owners. It’s not only a costly expense on the balance sheet, but it can also be a bit of a headache to administer. Employers must focus on all aspects of safety – starting with hiring, orientation, and training. When claims occur, they must be diligent with early-return-to-work and other cost containment strategies.
It’s important to stay informed and on the leading edge of workers’ compensation best practices. With these goals in mind, here are five trends to watch.
Trend #1: Workers’ Compensation Rates Rising
By now, most businesses understand that the insurance market is hardening. Many lines of insurance have experienced rate hikes paired with decreased capacity and stricter underwriting. Fortunately, the impact on workers’ compensation insurance rates has not been severe. However, after years of favorable rates, we are starting to see increases. According to MarketScout, workers’ compensation rates increased 1% in the second quarter of 2021, compared to the average property and casualty rate increase of 5.9%.
Rates can vary significantly from state to state. In California, the Workers’ Compensation Insurance Rating Bureau has voted to authorize a pure premium rate increase of 2.7%, according to Insurance Journal.
Takeaway: Now is the time to shore up safety procedures and prepare for rate increases.
Trend #2: Uncertainty Surrounding COVID-19 Claims
In response to the pandemic, many states passed laws or issued orders to make it easier for workers to file claims related to COVID-19 infection. According to an article Insurance Journal earlier this year, COVID’s impact on workers’ compensation has not been as bad as many feared, and most claims have involved only limited treatment.
However, despite the roll out of COVID-19 vaccines, the pandemic isn’t over yet. In addition to new infections, we may see more claims related to long-lasting symptoms, often called long-haul or simply long COVID; Scientific American warns that long COVID cases could lead to a “tsunami of disability.”
Takeaway: Watch COVID claims carefully.
Trend #3: Telehealth Takes Off
Another result of the pandemic has been a surge in telehealth adoption. Although telehealth gained popularity as a remote communication platform to help limit the spread of COVID, there may be other benefits. According to Business Insurance, the Workers Compensation Research Institute has found that telemedicine has become one of the most commonly used cost-containment strategies. Even as COVID restrictions ease, telehealth’s convenience and cost-effectiveness may make it appealing in workers’ compensation programs.
Takeaway: Incorporate telehealth as a work comp cost containment strategy. Ask us for recommendations.
Trend #4: Marijuana for Pain Management
Many workers’ compensation claims involve back injuries and other conditions that can result in long-lasting or chronic pain. In the past, opioids have often been prescribed, but the rise in addiction and overdoses has brought this practice into question. According to the CDC, many states have limited opioid availability or taken other steps to address the problem of opioid use in their workers’ compensation programs.
Some people view marijuana as a safer alternative than opioids for pain management. However, this is complicated by marijuana’s legal status. According to Claims Journal, some state courts have ruled that workers’ compensation should cover medical marijuana. At the same time, employers in some states may use post-accident marijuana testing to deny a workers’ compensation claim. According to Property Casualty 360, a positive test can occur weeks after use, making post-accident testing a contentious issue in states where medical or recreational marijuana is legal.
Takeaway: Ensure that the employee handbook and all other practices and procedures accurately and consistently communicate the company’s position on marijuana usage.
Trend #5: Worker Classification
State laws typically require businesses to carry workers’ compensation coverage for employees. However, coverage is not typically required for independent contractors.
This is one reason why worker classification can be a high-stakes issue. Recent lawsuits have accused businesses of misclassifying workers as independent contractors. In California, AB 5 has created stricter rules for worker classification. This law went into effect in 2020. Other states have considered similar changes. If workers are reclassified as employees, they may become entitled to workers’ compensation protection and other employee rights.
Takeaway: Proper worker classification is paramount. This is both a workers’ compensation issue and an employment practices liability issue.
A Proactive Strategy Is Key
As always, employers must be proactive with managing their workers’ compensation insurance programs. This includes keeping a sharp eye on claims and making sure reserves are accurate at all times. Employers who have better-than-average loss experience often discover that captive programs are more cost-effective than traditional workers’ compensation insurance.
Tangram Insurance Services provides cost-effective workers’ compensation insurance and captive programs for brokers and businesses. Contact us to learn more.