Two trends are poised to have a yet-undetermined effect on the Workers' Compensation market: hiring inexperienced workers to fill vacant roles and the shift to working from home.

The Risk of Inexperienced Workers

Despite the recent economic uncertainty and growing number of corporate layoffs, the U.S. labor market imbalance between supply and demand has continued. In August 2022, the U.S unemployment rate stood at 3.7%1 — the fifth consecutive month of an unemployment rate below 4%.

To fill open positions, companies have relaxed their hiring standards — even companies in high-hazard segments, such as trucking and non-artisan trades. Eager to get their new employees up and running, companies are rushing their training.

The result is an accident waiting to happen.

"In my experience, having comprehensive hiring practices with safety orientation and ongoing training is one of the best ways to prevent accidents," observed Dayna Schneider, area senior vice president of Underwriting at RPS. "It also creates a better-performing risk."

According to a 2019 report from The Center for Construction Research and Training, 44.5% of workers who were injured in Tennessee had two years or less of experience. Those who had been on the job for six months accounted for 30% of injuries.2

For older experienced employees who remain on the job, claim severity is higher as they take longer to recover. According to National Council on Compensation Insurance (NCCI) data, for workers age 65 and older, Workers' Comp claim frequency continues to climb, compared to an overall decline in comp claims for other age groups in this data set. Those in this age group also spend more time off the job when injured: 16 days compared to an overall average of eight.3

Hazards At Home

There's no question that work from home is here to stay, whether it's a full-time or hybrid arrangement. And while fewer employees coming into the office lessens the chance that an employee will slip in a puddle of water in the lobby, it means that insurers need to consider new claims scenarios, such as:

  • Tripping over the dog while getting a file, damaging their shoulder
  • Developing a bad back/degenerative disk associated with poor ergonomic conditions
  • Experiencing carpal tunnel syndrome due to a poor at-home computer setup

According to Mark Williams, executive vice president of Business Development at RPS, the ease with which employees can work outside of standard business hours turns Workers' Comp into a 24-hour exposure.

"Another challenge that carriers will need to grapple with is the lack of witnesses to corroborate a claim," he added.

Work from home also has implications for how the coming-and-going rule is interpreted. For example, if an employee has an accident during the commute to the office, it's clearly not a Workers' Comp claim. However, if the employee works full time from home, that interpretation could change if the home is considered a secondary job site.

As an extremely long-tail market, it can be challenging to predict the impact of these labor trends on Workers' Comp claims. Only time will tell.

Learn more about what's next for the Workers' Comp industry in the RPS 2022 U.S. Workers' Compensation Market Outlook.

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1"The Employment Situation — August 2022," Bureau of Labor Statistics, 2 Sept 2022. PDF file.

2Taylor, Edward L., John Moore, Thomas Cressler, John Wagner and Terry Higgins. "The Role of Employee Tenure in Construction Industries: the Tennessee Case," The Center for Construction Research and Training, Apr 2019. PDF file.

3Coate, Patrick. "Latest Trends in Worker Demographics," NCCI, May 2021. PDF file.