5 Workers’ Compensation Trends to Watch in 2024
The workers’ compensation industry faces new challenges, from legislation to rising medical inflation. Could these trends shift the landscape of an industry that has been considerably more stable than other property and casualty lines?
January 12, 2024
This year, industry professionals are closely monitoring a rise in the frequency and severity of claims, an evolution of presumption qualifications, and more.
“While workers’ compensation has been the most stable property and casualty line for several years, there are signs of costs increasing, including medical inflation and increasing frequency rates,” said Mark Walls, Vice President of Client Engagement at Safety National. “In addition, legislative and regulatory changes could impact the definition of independent contractors, the burden of proof for claims, and even what is a compensable injury.”
Risk managers and insurance professionals should closely monitor these five trends in 2024.
1. Frequency Rates
Data from the National Council on Compensation Insurance (NCCI) show that workers’ compensation accident frequency rates have trended downward in the last 20 years, resulting in rate reductions for many businesses. However, this trend may be changing. November and December 2022 data from the Bureau of Labor Statistics (BLS) noted that private industry employers saw a 4.5% increase in workplace injuries and a 5.7% increase in fatal injuries. The overall workplace injury rate was mostly unchanged from 2021, but when work-related illnesses were factored in, the rate increased. Additionally, the rate of fatal work injuries increased compared to 2021. Some of this can be attributed to new employees, who carry an increased accident frequency rate. For risk managers, safety training and pre-employment physicals should be a continued priority.
2. Medical Inflation
Recently, medical inflation in workers’ compensation has been lower than overall economic inflation. However, most workers’ compensation medical costs are controlled by fee schedules lacking automatic adjustment provisions, so it can take longer for any increased cost to be reflected during inflationary periods. With increasing labor and material costs, providers are pushing for fee schedule revisions. For example, Illinois has an automatic inflation adjustment built into its medical fee schedule, so as of January 1, 2024, most workers’ compensation medical service costs increased by 8.3%. Services not covered by fee schedules, like attendant care, long-term care, transportation, and durable medical equipment (DME) are already seeing significant inflation.
3. Evolving Presumptions
Presumption laws regarding first responders have been the most common form of workers’ compensation legislation for years, and have expanded over time to include cancers. These presumptions switch the burden of proof so conditions are “presumed” work-related unless the employer can prove otherwise. In recent years, post-traumatic stress disorder (PTSD) is emerging as a presumption, and now includes dispatchers and other occupations. The presumptions create situations where different workers exposed to the same situation have different claim outcomes. For example, a police officer responding to a workplace shooting could file for a PTSD claim, but those onsite employees where the shooting occurred may not. This year, Connecticut made all employee PTSD claims compensable. Washington also passed a PTSD presumption that applies to nurses. With a legislative blueprint in place, will other states expand presumptions?
4. Workplace Violence
Workplace violence continues to be a trend year over year. It is a leading cause of injury for healthcare and K-12 education employees. Retailers have also seen an increase, with employees walking off the job due to safety concerns and businesses closing locations due to risks. Law enforcement officers have also been heavily impacted. Data from the National Police Association shows 378 officers were shot in 2023, which represents a 60% increase when compared to 2018. Employers are increasingly focused on safety in the workplace, including psychological safety, which can impact employee morale and worker retention.
5. Exclusive Remedy
Lawsuits involving exclusive remedy have typically been dismissed on summary judgment because the burden to overcome it is difficult, noting an intentional act or gross negligence. Throughout the pandemic, there were a number of challenges to exclusive remedy, with most claiming that an employee brought COVID-19 home to their family. For the most part, these cases were dismissed. Recently, two high-profile cases were allowed to proceed on merits to let a jury decide if the burden to overcome exclusive remedy was met. Both of these cases involve workplace shootings in Virginia, with employees claiming their employer was aware of the risks and did not take appropriate action to protect them. If these plaintiffs prevail, it is likely that similar suits will be introduced in other jurisdictions.