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The Dual Challenge of Managing Workers’ Comp

A multi-generational workforce presents complex workers' comp exposures for insureds.
By: | March 13, 2017 • 5 min read

America’s workforce is getting older. But it’s also getting younger.

How can that be?

Two parallel trends are driving this seemingly contradictory trend. Workers are delaying retirement and staying at their jobs later in life, while an influx of young, less experienced workers join the ranks.

Each group of this multi-generational mix comes with their own unique challenges. Older workers can have higher rates of illness and chronic health conditions, while younger workers may be healthier but more prone to a workplace injury due to inexperience, said Woody Dwyer, vice president, workers’ compensation for Travelers risk control.

“Many companies may not focus on the risk of increased medical costs associated with younger workers, but they are seeing greater injury frequency and severity due to unskilled or inexperienced workers,” he said. According to Travelers data, in manufacturing, nearly 28 percent of injuries occur within the first year of employment. This jumps significantly to 52 percent in construction. 1

The cost of medical care is also rising.

“While there has been a 50 percent reduction in workers’ compensation injuries over the past 25 years, medical costs will constitute 70 percent of each claim in just a few years,” Dwyer said. Corporations continue to focus on reducing the frequency of workplace injuries, and according to Travelers 2016 Business Risk Index, 59 percent of U.S. business leaders cite medical cost inflation as a top concern.

Managing these costs is critical for long-term success, but focusing solely on the aging workforce provides an incomplete picture of the challenge.

A key way to address the unique risks posed by both older and young workers, while reducing injury and better managing chronic conditions, is to engage employees at every stage of employment from recruitment to retirement.

Engagement at Every Stage

Engaged workers save their employers money not only by being safer, but also by being more productive. A Gallup survey of the American workforce showed that an engaged workforce experiences fewer safety incidents than disengaged employees, with the top quartile of the study experiencing 48 percent fewer safety accidents than the bottom quartile2.

But engagement looks different across the distinct contexts of hiring, onboarding and training, and providing ongoing support for all employees.

“Business leaders should recognize and harness opportunities for engagement in all of these critical points,” Dwyer said.

  1. Attracting and Hiring

Woody Dwyer, 2nd Vice President – Workers’ Compensation, Risk Control

Building engagement begins before a candidate even comes in for an interview. It all starts with the job description.

In addition to detailing a position’s essential functions and physical demands, the description should also outline associated safety measures and protocols. This sends the message up front that a company cares about its employees’ wellbeing and prioritizes safety just as highly as the work being performed.

The job interview itself provides another opportunity. A technique called “behavioral interviewing” shifts the conversation to focus on the candidate’s previous experiences and behaviors in challenging situations. It asks the potential hire to tell stories about themselves and provide examples that illustrate how he or she views safety.

“You can find out what skills and behaviors your candidate exhibits in specific scenarios that indicate how they’ll react and respond to a similar situation on the job,” Dwyer said. “For example, in addition to interviewing them about their knowledge of the job, ask them to describe a specific safety hazard they encountered and what they did. Ask them to describe their decision-making process.”

With detailed job descriptions and behavior-oriented interviewing, companies are more likely to hire candidates who understand the importance of safety and who are likely to stay engaged on the job.

  1. Onboarding and Training

Some of that support comes in the form of effective training, which is equally important for new hires, internal workers switching to a new role, and for injured workers in transitional duty.

“There is a difference between orientation and training,” Dwyer said. Rather than just walking new workers through the motions and instructing them on the use of safety equipment and procedures, trainers and managers should take a more active approach.

“This is another opportunity for engagement, for workers to get ingrained with the safety culture and practice not only their job skills, but also the habit of recognizing risks and responding appropriately,” he added.

New workers are generally most engaged and ready to form long term safety habits during their first six months, but this is also prime time for injury vulnerability as they become accustomed to their new roles and workspaces.

  1. Supporting and Engaging

Reducing employee injuries through strong safety training is one thing, but managing the injured worker’s recovery along with the medical costs associated with chronic, comorbid conditions is another.

According to the Centers for Disease Control and Prevention (CDC), half of all U.S. workers have at least one chronic condition, and the cost of treating these patients is twice as high as for those with no chronic conditions. Wellness programs that promote healthy lifestyles and aid workers in the management of diabetes, high blood pressure and other chronic conditions can help to keep medical costs in check. These programs can also encourage engagement because employees will see that their employer has invested in their wellbeing and taken steps to create a healthy workplace.

A strong post-injury management program can go a long way towards earning employees’ trust and dedication, while also controlling workers’ compensation costs. Taking a sports medicine approach to help injured workers return to work through transitional duty is often critical to shortening recovery time and limiting the life of a claim.

Gain the Advantage

Travelers can help insureds capture these opportunities for engagement with Travelers Workforce AdvantageSM, a model that provides insight into the vulnerabilities of their unique workforces and provides the tools to invest in your greatest asset – people.

“Risk Control tools and resources are scalable to your company needs and workforce size,” Dwyer said. “What it really provides is expertise and a holistic approach to managing workers’ compensation exposures with a unique set of resources to help attract, train and support employees while promoting a culture of safety. We know safe and engaged employees drive strong and productive business, and this is a competitive advantage.”

To learn more about driving employee engagement, visit Travelers at https://www.travelers.com/resources/workplace-safety/index.aspx.

1 Travelers 2014 Study

2 GALLUP, State of the American Workplace, Employee Engagement Insights for U.S. Business Leaders



This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Travelers. The editorial staff of Risk & Insurance had no role in its preparation.

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and generated revenues of approximately $28 billion in 2016. For more information, visit www.travelers.com.

2017 RIMS

RIMS Conference Opens in Birthplace of Insurance in US

Carriers continue their vital role of helping insureds mitigate risks and promote safety.
By: | April 21, 2017 • 4 min read

As RIMS begins its annual conference in Philadelphia, it’s worth remembering that the City of Brotherly Love is not just the birthplace of liberty, but it is the birthplace of insurance in the United States as well.

In 1751, Benjamin Franklin and members of Philadelphia’s first volunteer fire brigade conceived of an insurance company, eventually named The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire.


For the first time in America — but certainly not for the last time – insurers became instrumental in protecting businesses by requiring safety inspections before agreeing to issue policies.

“That included fire brigades and the knowledge that a brick house was less susceptible to fire than a wood house,” said Martin Frappolli, director of knowledge resources at The Institutes.

It also included good hygiene habits, such as not placing oily rags next to a furnace and having a trap door to the roof to help the fire brigade fight roof and chimney blazes.

Businesses with high risk of fire, such as apothecary shops and brewers, were either denied policies or insured at significantly higher rates, according to the Independence Hall Association.

Robert Hartwig, co-director, Center of Risk and Uncertainty Management at the Darla Moore School of Business, University of South Carolina

Before that, fire was generally “not considered an insurable risk because it was so common and so destructive,” Frappolli said.

“Over the years, we have developed a lot of really good hygiene habits regarding the risk of fire and a lot of those were prompted by the insurance considerations,” he said. “There are parallels in a lot of other areas.”

Insurance companies were instrumental in the creation of Underwriters Laboratories (UL), which helps create standards for electrical devices, and the Insurance Institute for Highway Safety, which works to improve the safety of vehicles and highways, said Robert Hartwig, co-director, Center of Risk and Uncertainty Management at the Darla Moore School of Business at the University of South Carolina and former president of the Insurance Information Institute.

Insurers have also been active through the years in strengthening building codes and promoting wiser land use and zoning rules, he said.

When shipping was the predominant mode of commercial transport, insurers were active in ports, making sure vessels were seaworthy, captains were experienced and cargoes were stored safety, particularly since it was the common, but hazardous, practice to transport oil in barrels, Hartwig said.

Some underwriters refused to insure ships that carried oil, he said.

When commercial enterprises engaged in hazardous activities and were charged more for insurance, “insurers were sending a message about risk,” he said.

In the industrial area, the common risk of boiler and machinery explosions led insurers to insist on inspections. “The idea was to prevent an accident from occurring,” Hartwig said. Insurers of the day – and some like FM Global and Hartford Steam Boiler continue to exist today — “took a very active and early role in prevention and risk management.”

Whenever insurance gets involved in business, the emphasis on safety, loss control and risk mitigation takes on a higher priority, Frappolli said.

“It’s a really good example of how consideration for insurance has driven the nature of what needs to be insured and leads to better and safer habits,” he said.

Workers’ compensation insurance prompted the same response, he said. When workers’ compensation laws were passed in the early 1900s, employee injuries were frequent and costly, especially in factories and for other physical types of work.

Because insurers wanted to reduce losses and employers wanted reduced insurance premiums, safety procedures were introduced.

“Employers knew insurance would cost a lot more if they didn’t do the things necessary to reduce employee injury,” Frappolli said.

Martin J. Frappolli, senior director of knowledge resources, The Institutes

Cyber risk, he said, is another example where insurance companies are helping employers reduce their risk of loss by increasing cyber hygiene.

Cyber risk is immature now, Frappolli said, but it’s similar in some ways to boiler and machinery explosions. “That was once horribly damaging, unpredictable and expensive,” he said. “With prompting from risk management and insurance, people were educated about it and learned how to mitigate that risk.

“Insurance is just one tool in the toolbox. A true risk manager appreciates and cares about mitigating the risk and not just securing a lower insurance rate.

“Someone looking at managing risk for the long term will take a longer view, and as a byproduct, that will lead to lower insurance rates.”

Whenever technology has evolved, Hartwig said, insurance has been instrumental in increasing safety, whether it was when railroads eclipsed sailing ships for commerce, or when trucking and aviation took precedence.

The risks of terrorism and cyber attacks have led insurance companies and brokers to partner with outside companies with expertise in prevention and reduction of potential losses, he said. That knowledge is transmitted to insureds, who are provided insurance coverage that results in financial resources even when the risk management methods fail to prevent a cyber attack.


This year’s RIMS Conference in Philadelphia shares with risk managers much of the knowledge that has been developed on so many critical exposures. Interestingly enough, the opening reception is at The Franklin Institute, which celebrates some of Ben Franklin’s innovations.

But in-depth sessions on a variety of industry sectors as well as presentations on emerging risks, cyber risk management, risk finance, technology and claims management, as well as other issues of concern help risk managers prepare their organizations to face continuing disruption, and take advantage of successful mitigation techniques.

“This is just the next iteration of the insurance world,” Hartwig said. “The insurance industry constantly reinvents itself. It is always on the cutting edge of insuring new and different risks and that will never change.” &

Anne Freedman is managing editor of Risk & Insurance. She can be reached at [email protected]