Understand Aging Workers to Better Manage Claims
Contrary to popular belief, injury risk for older workers declines for only half the working population. Recent research shows the risk of occupational injuries increases with age for women.
“There is a weird phenomenon that women over the age of 50 are all of a sudden at higher risk than men for injury at work,” said Jeffrey Austin White, director of innovation for Accident Fund Holdings. In fact, a report from the California Commission on Health and Safety and Workers’ Compensation also found that injury risk among women through the age of 64 stays constant or increases gradually with age.
It is that type of finding that portends the many issues related to the aging workforce. Recent research indicates it would be a mistake for workers’ comp practitioners to look at it in a vacuum.
“There’s this perception that once baby boomers retire, the issues with an aging workforce will be over,” White said. “My message is ‘no, it’s just beginning.’ Yes, there will be a flattening of the age distribution profile, but the real issues are multifaceted.”
“In 2013, we had more claims for women than men. It was the first time in the history of the company that the number of female claims surpassed that of the male population in our book of business.” — Jeffrey Austin White, director of innovation, Accident Fund Holdings
White, who is charged with pouring over research and making sense of it for the workers’ comp system, said there is a confluence of factors related to aging workers. Stakeholders, he said, need to be aware of them and take action to ensure their workers — and their bottom lines — are safe and healthy.
New Trends in Aging Workers
Despite concerns about baby boomers retiring and leaving a void of institutional knowledge, there is growing evidence of a different trend. Where the labor force grew by more than 1.1 percent during the 1990s, it is projected to grow by just 0.4 percent in the current decade and even less in the next 10 years.
“Slower labor force growth will encourage employers to adopt approaches to facilitate greater labor force participation among women, the elderly, and people with disabilities,” correctly predicted a 2004 RAND study on future work trends and implications. “In a tight labor market, employers can try to recruit groups with relatively low labor force participation. Changes in incentives associated with pension plans and reforms to Social Security may motivate older workers to retire later.”
In addition to declining financial resources and recruitment efforts aimed at older workers, there is increasing appeal. It is becoming easier for older people to work.
“As technology advances and communication platforms get more sophisticated, the amount of physical activity required in the workplace will diminish, allowing employers to get more creative with their hiring practices and work schedules,” White said. “This essentially opens the door for the disabled or elderly to participate longer in the workforce, perhaps working from remote locations (like from home) or under non-standard work relationships. Economics and market pressures will encourage this practice.”
Advances in automation technology and informatics are minimizing the risk to workers by reducing the need for physical labor. Finally, improved health and increased life expectancies are making it easier for people to work into older ages.
“There are a lot of dynamics going on there,” White said. “The feasibility of an older working population presents a multitude of issues in workers’ compensation claims management.”
All older workers are not the same. However, there are some commonalities that create challenges for workers’ comp payers and managers.
“As we get older there is a higher risk for acquired disease such as diabetes, coronary artery disease, hypertension, you name it. We are more susceptible to comorbidities or complicating medical factors as we age,” White said. “The lines are often blurred around the accountability for payment of comorbid conditions surrounding a workplace injury. The added cost are staggering, and there is a lot of preparation needed to mitigate the risk of an aging workforce.”
Another generalization about older workers relates to the types of injuries they sustain, as well as their recoveries.
“Above [age] 50 we see a lot more slips and falls, and a lot more strains,” White said. “We are seeing different types of injuries within this population, and it takes longer for them to heal and get back to work than the younger generation.”
Added to age-related concerns of injured workers are factors such as gender and ethnicity, which may increase the risk of injury and/or present additional challenges in their recoveries. Recent findings about women are significant when considering that women now participate in the workforce equally to men.
“In 2013, we had more claims for women than men,” White said. “It was the first time in the history of the company that the number of female claims surpassed that of the male population in our book of business.”
While the increasing number of workers’ comp claims among women is likely due to more women in the workforce, it also has to do with the higher risk propensity of women as they age. The CHSWC study also found that even among younger women the risk of injury was 20 percent to 50 percent higher than for men working in the same job.
White also points to obesity as a factor related to aging that creates pockets of risk-prone populations.
Non-Legislative Paths to Fix Workers’ Comp
Workers’ compensation has long been a burden to nearly all parties involved in the process. Be it the employer, injured employee or insurance company, few feel like they’re getting the fair end of the deal. It’s no surprise states across the country are taking a stab at legislative changes to improve the workers’ compensation system.
Consider Tennessee. Not even a year after enacting workers’ comp reform, legislators are proposing to allow private employers to opt out of the traditional workers’ compensation plans in favor of writing their own rules.
While the driving force is to reduce the high costs typically associated with workers’ comp claims, it should be known that legislation is far from the only way to curb these costs. While there are multiple proactive back-end strategies, one of the most effective methods to significantly reduce claims costs is to enforce a well-defined modified duty program.
Beating Time, Saving Money, Reducing Risk With Modified Duty
Time is the main culprit behind the high cost of workers’ comp. When employees remain off the clock, the financial burden of a claim quickly snowballs. Consider that lost time alone accounts for about 94 percent of typical claim costs. Implementing a modified duty program to get injured employees back to work sooner – even in a limited physical capacity – is essential to addressing this costly problem.
Not only does indemnity increase with every day an injured employee remains at home, it also becomes more likely that other issues will arise that can compound costs. Injured employees who remain at home for long periods of time to heal are more likely to fall victim to depression, weight gain or prolonged healing from remaining inactive, which in turn, keeps medical expenses and lost time expenses accumulating.
Without modified duty, costly litigation is also more likely to happen because of secondary medical issues arising or the breakdown of employer communication that can occur when an employee is out of the office.
Yet, a pre-determined, stringent modified duty allows injured employees to heal in a manner that:
- is approved by a physician
- gets an injured employee physically active and socially stimulated
- keeps communication open with employers and
- demonstrates value to judicial and medical officials as permanent or temporary impairment ratings are delivered.
It’s important for a modified duty program to be in place before an employee gets injured to eliminate confusion and, ultimately, prevent additional lost time.
Work with employers to create modified job descriptions that accommodate a wide variety of injuries, including the inability to use one’s back, hands or legs, and keep them accountable to the program. Even if an injured employee does not live in the same area as the employer, as is often the case with truck drivers, for instance, he may be able to perform work for a local non-profit agency as a way to earn credit for modified duty.
While modified duty may be just one cog in the machine to reduce workers’ compensation claims costs, it can be the key to reducing significant expenses, removing the need for a legislative crutch.
Healthcare: The Hardest Job in Risk Management
Radically changing cost and reimbursement models.
Rapidly evolving service delivery approaches.
It is difficult to imagine an industry more complex and uncertain than healthcare. Providers are being forced to lower costs and improve efficiencies on a scale that is almost beyond imagination. At the same time, quality of care must remain high.
After all, this is more than just a business.
The pressure on risk managers, brokers and CFOs is intense. If navigating these challenges wasn’t stress inducing enough, these professionals also need to ensure continued profitability.
“Healthcare companies don’t hide the fact that they’re looking to reduce costs and improve efficiencies in practically every facet of their business. Insurance purchasing and financing are high on that list,” said Leo Carroll, who heads the healthcare professional liability underwriting unit for Berkshire Hathaway Specialty Insurance.
But it’s about a lot more than just price. The complexity of the healthcare system and unique footprint of each provider requires customized solutions that can reduce risk, minimize losses and improve efficiencies.
“Each provider is faced with a different set of challenges. Therefore, our approach is to carefully listen to the needs of each client and respond with a creative proposal that often requires great flexibility on the part of our team,” explained Carroll.
Creativity? Flexibility? Those are not terms often used to describe an insurance carrier. But BHSI Healthcare is a new type of insurer.
The Foundation: Financial Strength
Berkshire Hathaway is synonymous with financial strength. Leveraging the company’s well-capitalized balance sheet provides BHSI with unmatched capabilities to take on substantial risks in a sustainable way.
For one, BHSI is the highest rated paper available to healthcare providers. Given the severity of risks faced by the industry, this is a very important attribute.
But BHSI operationalizes its balance sheet in many ways beyond just strong financial ratings.
For example, BHSI has never relied on reinsurance. Without the need to manage those relationships, BHSI is able to eliminate a significant amount of overhead. The result is an industry leading expense ratio and the ability to pass on savings to clients.
“The impact of operationalizing our balance sheet is remarkable. We don’t impose our business needs on our clients. Our financial strength provides us the freedom to genuinely listen to our clients and propose unique, creative solutions,” Carroll said.
Keeping Things Simple
Healthcare professional liability policy language is often bloated and difficult to decipher. Insurers are attempting to tackle complex, evolving issues and account for a broad range of scenarios and contingencies. The result often confuses and contradicts.
Carroll said BHSI strives to be as simple and straightforward as possible with policy language across all lines of business. It comes down to making it easy and transparent to do business with BHSI.
“Our goal is to be as straightforward as we can and at the same time provide coverage that’s meaningful and addresses the exposures our customers need addressed,” Carroll said.
Claims: More Than an After Thought
Complex litigation is an unfortunate fact of life for large healthcare customers. Carroll, who began his insurance career in medical claims management, understands how important complex claims management is to the BHSI value proposition.
In fact, “claims management is so critical to customers, that BHSI Claims contributes to all aspects of its operations – from product development through risk analysis, servicing and claims resolution,” said Robert Romeo, head of Healthcare and Casualty Claims.
And as part of the focus on building long-term relationships, BHSI has made it a priority to introduce customers to the claims team as early as possible and before a claim is made on a policy.
“Being so closely aligned automatically delivers efficiency and simplicity in the way we work,” explained Carroll. “We have a common understanding of our forms, endorsements and coverage, so there is less opportunity for disagreement or misunderstanding between what our underwriters wrote and how our claims professionals interpret it.”
Responding To Ebola: Creativity + Flexibility
The recent Ebola outbreak provided a prime example of BHSI Healthcare’s customer-centric approach in action.
Almost immediately, many healthcare systems recognized the need to improve their infectious disease management protocols. The urgency intensified after several nurses who treated Ebola patients were themselves infected.
BHSI Healthcare was uniquely positioned to rapidly respond. Carroll and his team approached several of their clients who were widely recognized as the leading infectious disease management institutions. With the help of these institutions, BHSI was able to compile tools, checklists, libraries and other materials.
These best practices were immediately made available to all BHSI Healthcare clients who leveraged the information to improve their operations.
At the same time, healthcare providers were at risk of multiple exposures associated with the evolving Ebola situation. Carroll and his Healthcare team worked with clients from a professional liability and general liability perspective. Concurrently, other BHSI groups worked with the same clients on offerings for business interruption, disinfection and cleaning costs.
Ever vigilant, the BHSI chief underwriting officer, David Fields, created a point of central command to monitor the situation, field client requests and execute the company’s response. The results were highly customized packages designed specifically for several clients. On some programs, net limits exceeded $100 million and covered many exposures underwritten by multiple BHSI groups.
“At the height of the outbreak, there was a lot of fear and panic in the healthcare industry. Our team responded not by pulling back but by leaning in. We demonstrated that we are risk seekers and as an organization we can deploy our substantial resources in times of crisis. The results were creative solutions and very substantial coverage options for our clients,” said Carroll.
It turns out that creativity and flexibly requires both significant financial resources and passionate professionals. That is why no other insurer can match Berkshire Hathaway Specialty Insurance.
To learn more about BHSI Healthcare, please visit www.bhspecialty.com.
Berkshire Hathaway Specialty Insurance (www.bhspecialty.com) provides commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, and homeowners insurance. It underwrites on the paper of Berkshire Hathaway’s National Indemnity group of insurance companies, which hold financial strength ratings of A++ from AM Best and AA+ from Standard & Poor’s. Based in Boston, Berkshire Hathaway Specialty Insurance has regional underwriting offices in Atlanta, Boston, Chicago, Los Angeles, New York, San Francisco, Toronto, Hong Kong, Singapore and New Zealand. For more information, contact firstname.lastname@example.org.
The information contained herein is for general informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any product or service. Any description set forth herein does not include all policy terms, conditions and exclusions. Please refer to the actual policy for complete details of coverage and exclusions.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Berkshire Hathaway Specialty Insurance. The editorial staff of Risk & Insurance had no role in its preparation.