Workplaces are far safer now than they were even a few decades ago. Still, the Bureau of Labor Statistics says there are 3.4 workers comp claims filed for every 100 full-time employees.
Know the stats behind workers comp claims to identify trends, make informed decisions, and add more value to your clients.
We compiled all the latest reports from the key sources in safety and insurance to empower you to better help your clients.
Too often, insurers associate high-risk industries with high rates of injury. The logic behind the sentiment makes sense, but when you dive into the numbers, the story isn’t so simple.
Let’s start with the worst-case events: workplace fatalities.
Workplace fatalities were at their highest during the early 20th century. Between July 1906 and Jun 1907, 526 workers died in work accidents in Allegheny County, Pennsylvania alone. Out of those, 195 were steelworkers. By 1997, there were only 17 steelworker fatalities across the entire country in one year.
We’ve come a long way in 100 years. And our progress is primarily because of laws introducing regulation and oversight, like the Occupational Safety and Health Act of 1970.
Even still, workplace fatalities and fatal occupational injuries still occur – and they happen in bigger numbers than we realize. Worker deaths are down from 38 per day in 1970 to 17 in 2018.
In 2018, 5,280 workers died as the result of a work-place injury in the U.S., which was a 2% jump from 5,147 in 2017. Out of these, 4,779 worker fatalities were in private industry. Although more fatalities happened in 2018 than in 2017, the total fatal injury rate remained the same as it was in 2017: 3.5 per 100,000 full-time workers.
It’s unlikely we’ll ever see zero. At the same time, everyone can do more to work toward zero deaths. One of the ways we can do that is by understanding where and why workers are dying as a result of their workplace injuries and illnesses. To determine this, you need to look beyond the numbers and consider the measurements used.
Here’s a great example:
According to the National Security Council’s 2018 report on the Most Dangerous Industries, construction accounted for the highest number of workplace deaths. OSHA figures show that 21.1% of the 2018 OSHA reportable deaths were in construction.
Construction may track the most deaths. However, agriculture, forestry, fishing, and hunting had the highest death rate per 100,000 workers.
In other words, agriculture and forestry are more dangerous professions than construction because those industries have the highest rates of death. The difference is that construction has far more workers in total, which produces higher figures.
Of course, it’s not a contest. Neither industry wants to claim the crown of Most Dangerous Industry.
Some of the other surprising statistics from the NSC 2018 report include:
Key takeaway: The “most dangerous industry” depends on the metric you use to identify it.
With industries in mind, let’s talk about the causes of death. Data from 2016-2017 from the U.S. Department of Labor, Bureau of Labor Statistics, and Census of Fatal Occupational Injuries.
Source: U.S. Department of Labor, Bureau of Labor Statistics, Census of Fatal Occupational Injuries
The BLS produced similar data for construction workers. It identifies the “Fatal Four” construction accidents, which accounted for 58.6% of all construction worker deaths in 2018. The Fatal Four include:
According to OSHA, if workplaces could eliminate the fatal four, they would save 591 lives every year.
At the end of 2019, the Bureau of Labor Statistics published the Employer-Reported Workplace Injuries and Illnesses 2018 report.
The report found 2.8 million nonfatal workplace injuries and illnesses in 2018, which didn’t change from the previous year. Overall, that’s good news. No one wants to see injury rates go up. No change means safety programs are working and fraud is down.
However, as with workplace death data, the overall figures only tell half the story.
For example, retail accounted for 14% of all injuries and illnesses in 2018. It was also the only private industry where the total recordable cases (TRC) grew.
The TRC in retail jumped from 3.3 to 3.5 cases per full-time worker.
In fact, the BLS dives deeper and reports that both the number and rate of cases in retail increased. While the rate grew from 3.3. To 3.5, the number of recordable cases jumped by 4%.
What’s more, retail salespersons represented far more of the recordable days away from work than anyone else.
After retails salespersons, the BLS reports the following occupations in order:
The Insurance Information Institute produced different data highlighting the ten industries with the largest number of industries and illnesses.
Ten Industries with Occupations with the Largest Number of Injuries and Illnesses, 2018 (III)
You wouldn’t expect a retail salesperson to have a higher rate of injury than a stock mover, mechanic, or butcher. Unfortunately, safety in the retail industry is also discounted by management and even the workers.
Once you identify the problem, you can dig deeper and start to understand what’s fueling the growth.
One of the challenges retail salespeople face is that there is a high level of turnover. New employees don’t know the best safety practices, and if they come in from other fields of work, they won’t have health and safety experience. New retail staff, and especially young staff, need proper training, and the data suggests they aren’t getting it.
Young workers (under 30), in particular, generate one-third of all retail injuries, but their claims are relatively inexpensive, coming in at just 16% of total losses.
Another challenge faced in retail stores is the increasing number of workers over 70. Workers over 70 don’t generate the most claims, but their claims do come with the highest payout. When someone over 70 gets hurt at work, they are both more likely to be badly injured and take increased time away from work as they heal.
Losses for over 70s come with the highest average payout in retail: $14,408 per claim.
The rate of workplace injuries is holding steady, except in unique cases like retail. But what injuries are occurring, and why are they happening? To answer the question, we turned to the 2018 BLS report (with contributions from the U.S. Department of Labor, Survey of Occupational Injuries and Illnesses, and participating state agencies).
Incidence Rates per 10,000 full-time workers:
The data tells us that soft tissue injuries dominate most workplace injuries. However, the incidence rates above don’t reflect what’s happening in retail, where injuries are increasing across the board.
The Incidence Rates per 10,000 full-time workers in retail for the same injuries are:
Here, you can see that not only are retail workers seeing higher incidence rates across the board, but they’re also experiencing both soft tissue injuries, cuts, and fractures at greater rates.
The same BLS data found that the events behind the injuries include:
In retail, the figures tell a unique story:
Recordable COVID-19 infections may also find a place on this list by the new year.
A huge amount of focus tends to remain on what industries or job positions are most dangerous. But since 2013, new data shows that the type of employment also plays a role.
At the end of 2013, ProPublica published a report analyzing workers comp claims in five states (California, Florida, Massachusetts, Minnesota, and Oregon).
The results were shocking. Data showed temporary worker injury incidence rates were between 36% and 72% higher than the rates among non-temporary workers.
Why was this the case? Experts speculated that it could be in part because temporary workers were 68% more likely to find themselves working in high-risk occupations, namely the 20% of jobs with the highest BLS injury rates.
Of course, temporary workers can only file claims in states and with employers where they receive workers compensation coverage. Coverage for temporary or contract employees isn’t mandatory everywhere.
Another reason workers were more likely to file a claim? A 2017 study published based on data from the Department of Labor found that when allowed to file, temporary workers were more likely to request compensation. Qualitative data from the study suggested that permanent or traditional employees were less likely to file a claim either (1) out of loyalty to the employer or (2) as the result of employer behavior to discourage or suppress claims.
Why is this so important? There were 17 million workers in temporary employment in 2013. By 2018, there were 16.8 million temporary and contract workers in the U.S., which is the demographic more likely to be injured. Employers and insurers have a lot to worry about, and the findings suggest there should be a renewed emphasis on safety among these groups.
In the insurance industry, work-related injuries and illnesses translate into workers compensation claims. However, as brokers, we know not all claims are equal.
A claim for some stitches in a worker’s hand is not the same as a claim for amputation. Additionally, a slip and fall claim and a vehicle accident claim tend to play out very differently.
What claims are happening, and is there anything we can do to minimize the loss? Here’s what we found.
Medical claims and lost-time claims are two different animals. In terms of premiums, it’s lost time that could drive your clients’ premiums up (outside of California). Yet, it’s the medical claims that your clients have little-to-no control over. After all, they don’t control the costs of health care in the United States.
According to NCCI data provided by the National Safety Council, the most costly lost-time workers compensation claims by cause of injury come from motor-vehicle crashes. In 2016 and 2017, a motor-vehicle workers comp claim had an average of $78,293 per claim.
Why is this a problem? Beyond the sheer cost of these claims, the vast majority of workplace injuries are the product of motor vehicle crashes.
The only other causes with above-average costs were burns ($47,878), falls or slips ($46,592), and caught ($40,791).
So while the most expensive cause of injury claims come from motor vehicle crashes, the most expensive claims by nature of the injury are amputation claims. An amputation lost time claim cost an average of $98,126 per claim in 2016 and 2017.
After amputation, the next most expensive claims were:
The cost of claims changes wherever you go. However, California provides a good example of how much an insurer could pay out given the size of its market.
In California, the WCIRB 2019 California workers Compensation Losses and Expenses report found that
In 2018, total losses were $13.3 billion or 77% of the calendar year premium. The results indicate that claims in both years were comparable, but premiums went down as a result of fewer injuries and less fraud.
Even still, California has the most prolonged payouts of any state. And that’s a big problem for both insurers and workers.
Data shows 61% of accident per-year medical payments get paid more than three years after the beginning of the year of injury. Why? It could be because of the cure or relieve standard or the number of cumulative trauma claims.
However, the national average of claims paid after three years is 33%. So, California still has some explaining to do.
California insurers aren’t just slower to write checks. The state takes 11 years to settle 95% of indemnity claims.
If there’s one thing employers, insurance providers, brokers, and agents all have in common is the desire to lower costs. Agreeing on that point is easy. Figuring out how to make it happen is a different issue entirely.
As mentioned earlier, employers have little cost over the cost of health care. Returning to work faster is where money can be saved. And research suggests there’s room to put more emphasis on return to work.
A national, cross-sectional survey of 10,946 workers found that the workers compensation claims management process plays a role in return to work. The study found that 23% of workers said the claims process was negative or neutral with longer claims processing contributing to a poorer experience.
Having a positive experience was associated with self-reported return to work. It suggests that speeding up claims and making them easier can help get employees back to work faster, which in turn lowers the costs of claims due to short periods of lost time.
In a study run by Zurich, researchers found that nurse case management and early nurse referral can result in average savings of $6k-$26k by ensuring workers get the best care and can return to work quickly. The results found that engaging nurses early could knock as much as 50% off the medical bill.
Other surprising news: Lockton reviewed over 200,000 claims and found 67% of denied claims become paid claims within one year. And when those claims transition to paid, they cost an average of 55% more than the original claim might have. The report from Lockton found that when an insurer accepts a claim upon application, it pays an average of $10,153. A denied-to-approved converted claim costs $15,694.
Is conversion a big issue in your state? If you sell insurance in California, then you work in the state with the highest conversion rate. Texas agents and brokers work in a state with a lower conversion rate than the national average.
In the United States, the workers compensation insurance industry grew by 0.8% between 2015 and 2020. Between 2015 and 2018, the net premiums written grew by 2.1% despite lower premium prices during the same period.
How much are employers spending? According to the BLS, workers compensation premiums cost:
Naturally, high-risk industries spend more on workers compensation premiums than others. The Center for Construction Research and Training says that workers compensation makes up far more of employers’ compensation costs in construction than other industries.
Where is workers compensation most expensive?
The two highest cost states in the U.S. are New York and California. This stat surprises no one in the industry given the size of the workforce and robustness of state workers comp laws.
However, in the state of California, the cost of workers comp premiums is falling. Lower premium costs are the product of falling claims severity and workers comp reforms, particularly the reforms aimed at reducing fraud.
Back in 2014, employers paid a peak of $2.97 per $100 of payroll. By 2019, the cost fell to $1.96. The WCIRB expects the cost to fall again in 2020 to $1.81, in part due to job losses as a result of the coronavirus pandemic.
The figure isn’t all dollars and cents. The WCIRB describes it as “basically a 50-year low.”
In fact, the WCIRB expects an overall drop in written premium from $15.9 billion in 2019 to $12.5 billion 2020. In other words, California alone will spend $3.5 billion less.
What’s happening in other workers comp markets?
Let’s head over to Texas, which is a vastly different workers comp market. Private sector employers have the option to opt-out or non-subscribe to workers comp coverage — and they have had the choice since 1913.
Research from the Division of Workers’ Compensation found that Texas employers subscribe to provide medical care for injuries and benefit from lower premium rates.
Between 2016 and 2018, the percentage of private sector employers paying workers comp premiums fell from 78% to 72%. However, subscription rates for both years were still at the highest levels since 1993.
Additionally, 67-72% of subscribers reported their premiums either fell or remained the same for the year 2018.
Premiums are down, but will they continue to fall? It’s hard to say, but the NCCI is making the argument for rate reductions in some industries.
The NCCI argued for a rate reduction in 2019 of 16.8% in the voluntary market, thanks to a reduction in accidents and injuries. Among individual industries, the NCCI argued for the following reductions:
The insurance industry in the United States has grown almost year on year between 1960 and 2018. In 2018, there were 1,168,900 agents, brokers, and service employees working in the industry in general.
In California, the WCIRB is composed of all companies licensed to transact workers comp in California. It has over 400 member companies.
Are you a broker in Texas? You compete with 352 brokers (as of May 2020).
By now, you can see that while workplace fatalities and injuries are down, they haven’t gone away. In industries like retail where turnover is high, injuries are increasing both in frequency and in severity.
There is more nuance to specific workplace situations than the stats tell us at face value, but we can safely conclude: a best practice safety program is at the heart of fewer claims and lower premiums.
When your clients have employees working in high-risk roles, offer targeted guidance and technology to lower risk.
Lastly, your clients don’t need to be an OSHA statistic. By encouraging them to achieve safety compliance and beyond, you can help them lower their premiums and get injured employees back to work faster.