PREMIUMS ON THE RISE
A rising accident rate may seem surprising, given the many safety programs instituted by employers in recent years. “Workplaces are safer than they were 50 years ago,” admits Daniel C. Free, president and general counsel of Insurance Audit & Inspection (insuranceaudit.com) in Indianapolis. And that’s good because—at least until recently—controlling the number of accidents has gone a long way toward capping premiums.
Unfortunately, a number of factors have come together to reverse the favorable trend. Among them is a population that’s getting older, heavier and thus subject to more injury. “People used to retire in their 50s or 60s,” says Free. “Now they often stay in the workforce longer. Studies show that people who are older and overweight are more prone to slips and falls and lifting accidents, and take longer to heal.”
Other cost drivers abound: Injured workers today are treated with more sophisticated medical procedures and more costly prescription drugs. And as the economy emerged slowly from the recession, employers began hiring new workers who were not as cognizant of security procedures, and whose lower experience levels led to more job injuries.
Finally, states are bringing more conditions under the workers’ compensation umbrella. “Some procedures, such as knee replacements, might not have been covered a few years ago but are now common,” says Free. “And a growing number of states are covering nonphysical injuries such as mental stress.” It’s all coming together to boost the doctor’s share of the workers’ compensation bill. “Historically, the indemnity portion of workers’ compensation costs [the replacement of a portion of lost wages] was higher than the medical portion,” says Free. “Now the reverse is true. Rising medical costs are driving the increase in workers’ compensation premiums.”