In 2023, the construction sector reported three times the number of workers’ compensation claims compared with any other industry. Thirty-nine percent of serious injury claims were filed by construction workers. For comparison, only 11% were filed within the mining sector.

Construction has always been a risk-filled industry. But what’s driving workers’ compensation claims today? Ken Bunn, Vice President of Claims at Builders Mutual, discusses three of the top trends impacting workers’ comp and what contractors and insurers are doing about it.

Trend #1: Increasing medical utilization

Workers’ comp losses depend on two main factors: frequency – or number – of claims, and severity, a measure of how much each claim costs. While the frequency of claims has been flat to declining in recent years, severity has charged upward.

For example, larges losses – defined as claims over $250,000 at Builders Mutual – historically had been around 33% of the total spent on claims. Now, that figure stands at around 45%. Another insurer has seen a 30% increase over the last three years of claims worth over $10 million.

Why has severity risen so much? According to Bunn, a major cause is increased medical utilization. In other words, medical advances. Injured workers can now benefit from better treatments and receive more services to help with healing.

These advances should be celebrated, as they can prolong life and improve its quality. But these advances come with a cost. For example, workers who needed an amputation used to be fitted with a $5,000 prosthetic. Today, highly functional devices can cost as much as $40,000. Similarly, a person paralyzed from a job-site accident who once could be expected to live for a decade now may live three times as long. Workers’ comp must pay for healthcare throughout that entire period.

Rising costs for severe claims have more to do with additional services or technologies used to treat injuries, rather than inflation. In fact, medical inflation has risen more slowly than general prices over the past few years.

What’s the solution? Make sure injured workers receive the most appropriate care as efficiently as possible. Builders Mutual engages with catastrophic care experts to manage severe injuries. Builders Mutual also arranges for nurse case managers to work with injured workers to help them comply with doctors’ orders, keep appointments, and adhere to their treatments.

Trend #2: Comorbidities and changing demographics

More than half of U.S. adults have at least one chronic health condition, including high blood pressure, heart disease, diabetes, or obesity. Construction workers with one of these comorbidities may be more prone to injury or may require more time to recover.

In turn, comorbidities can complicate workers’ comp claims. Injured workers with one of these conditions may require specialized care or more extensive pharmaceutical regimens – all adding to higher costs.

Injured workers may also struggle with mental health. Since the pandemic, mental health has received its rightful attention. Doctors are more highly attuned to workers’ psychological well-being and will aim to treat these mental health conditions as well.

In fact, according to a recent survey among workers’ comp professionals, mental health conditions and comorbidities were the top two most concerning contributors to complex claims.

And while age isn’t considered a comorbidity per se, an aging construction workforce is contributing to increased workers’ comp claims. The median age of a construction worker is about 42 years old, and more than one-fifth are older than 55. In general, the older a worker, the more susceptible they are to workplace injuries.

Trend #3: Expanding expectations around coverage

What’s covered under workers’ comp had long been fairly cut and dry. Take a worker who breaks his leg on the job. Caring for that injury is par for the course. But what if the worker, during recovery, overcompensates for his limp and puts strain on his other knee, causing an additional injury? And then the worker, upset over his pain, experiences depression that must be treated. Should all those injuries fall under the original claim?

It comes down to expectations of compensability – and those expectations are changing. From one angle, legislative actions are expanding potential benefits. In 2022, there were 844 state and federal bills that would affect workers’ comp, and 243 proposed workers’ comp-related regulations.

From another angle, the involvement of attorneys in a claim can push for wider compensability, as they will seek to get the most for their client. Litigation, on the whole, can drive up claim expenses. One study found that litigated workers’ comp claims were 388% more expensive than non-litigated claims, and took 195% longer to close.

Tips for trends

In the face of these large economic and societal trends, individual contractors may feel overwhelmed. But there are steps to take to get out in front of workers’ comp claims:

• Invest in safety. The best way to manage claims is to avoid them in the first place. And that starts with preventing injuries on the job-site. Ensure your workers have the proper training and equipment, and that you work to eliminate as many hazards as possible from the workplace.
• Understand your crews. Get to know your workers’ individual limitations. If they are not capable of going on roofs, for example, due to lingering health issues, find other tasks for them to perform. Don’t put them in a position that can risk injury. If a worker does get hurt, stay engaged with them throughout their treatment and recovery by showing concern for their health and keeping lines of communication open.
• Hold subcontractors accountable. Make sure your subs have adequate workers’ comp insurance for their own workers. If not, you’ll be generally responsible for any claims filed on their behalf. The result? Higher premiums, more likely than not.
• Trust the experts. You’re focused on construction, not healthcare. Work with insurers that have partnerships with providers that can help manage your workers’ health. Plus, don’t overlook the value of a seasoned adjuster. Builders Mutual has adjusters with more than 20 years’ experience handling catastrophic claims, which can help speed the process and make it more cost-efficient.

If you need assistance strengthening your safety programs, we’re here to help. Builders Mutual risk management consultants can perform a safety audit of your job-site and help you create a return-to-work program that will help your employees gets back to work as quickly and safely as possible. Plus, our workers’ comp specialists can review your policies to make sure you have the coverage you need.

Contact your risk management consultant today to learn how you can make workers’ comp work to your advantage.