Hurricane Aftermath

Post-Disaster Impact on Workers’ Comp a Mixed Bag

Employers are urged to proceed with caution when returning to hurricane damaged properties.
By: | September 25, 2017 • 3 min read

In Houston, a region pummeled by Hurricane Harvey in late August, a massive cleanup is underway. The work will take time, and it presents significant risks for the workers tasked with setting things right.

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Ben Gonzalez, spokesperson for the Texas Department of Insurance, will not speculate on the frequency of workers’ comp claims or rates following the disaster. But he said the hurricane has presented serious health and safety hazards for those working on recovery and cleanup.

Those dangers, he said, range from fall and lifting hazards to cuts and lacerations to bites from snakes and insects. He also said that standing flood water poses risks such as exposure to infectious disease, chemicals and accidental electrocutions — all of which have been widely reported by the media.

“Even if extensive damage did not occur at a particular location, worksite conditions may have changed and employees may be doing work outside their regular duties as the try to get businesses ready to open,” he said. This creates potential hazards if businesses fail to take sufficient time to assess the environment and make sure employees have proper training and safety equipment, Gonzalez said.

Travis Vance, counsel in the Charlotte, N.C., office of Fisher Phillips, said it’s not unusual to have a spike in workers’ comp claims and costs after a disaster because employers use their own workers for cleanup instead of hiring a remediation company — a mistake that he has seen lead to insurance payouts in the millions of dollars.

He predicts the scale of the disaster left by Harvey and Irma will cause workers’ comp claims in Texas and Florida to jump by 15 to 20 percent in the next year.

But while many assume rates will spike following a natural disaster, records from past events suggest results can be difficult to predict.

It’s not unusual to have a spike in workers’ comp claims and costs after a disaster because employers use their own workers for cleanup instead of hiring a remediation company.

Workers’ comp rates in Louisiana spiked following the devastation left by Hurricane Katrina in 2005, while other states have reported flat rates and even declines in workers’ comp claims following natural disasters like hurricanes and flooding.

In Louisiana in 2006, a year after Katrina, the state reported a 38 percent increase in the number of workers’ comp claims processed.

But the most recent workers’ comp figures in the state so far do not show a spike in claims as a result of the August 2016 floods that decimated approximately more than 150,000 homes and businesses in the Baton Rouge area.

The state’s year-end 2016 figures actually showed a dip in claims, as well as workers’ comp insurance rates, which have dropped consistently from 2013 to 2016.

At Baton Rouge-based LUBA workers’ comp, a casualty insurance company, the company saw firsthand how post-disaster cleanup could affect workers’ comp since its own offices were under water.

But rather than seeing a jump, the company saw a slight decrease in claims in the year following the floods. Mike DePaul, LUBA’s chief operating officer, said that, in his company’s experience, people were so “focused and mission-driven” during cleanup efforts that the type of careless accidents that can happen to distracted workers just didn’t occur.

Another theory is with so much clean-up work available and people working together to rebuild, there’s less likelihood of employees filing fraudulent claims.

In 2012, Hurricane Sandy’s hit on New Jersey caused an estimated $30 billion in damage. However, according to Karla Bardinas, a spokesperson for the New Jersey Department of Labor and Workforce Development, total workers’ comp filings after Sandy — in 2012, 2013 and 2014 — actually declined compared to 2011.

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The Cambridge, Mass.-based Workers’ Compensation Research Institute found in its post-Katrina research that immediately after the hurricane, there was a dip in medical costs per claim in the New Orleans area, most likely due to a disruption in medical care. The state also saw a decline in the duration of temporary disability after the disasters mainly concentrated in hurricane-affected areas.

Regardless of whether Texas and Florida see rates jump like Katrina or remain flat and drop like they did in post-Sandy New Jersey, Vance said employers and insurers alike should not be complacent, and precautions should be taken to protect workers returning to workplaces that may be in less-than-optimal condition.

Angela Childers is a Chicago-based writer specializing in health care and business management. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

The Profession

For This Pharmaceutical Risk Director, Managing Risk Means Being Part of the Mission to Save Lives

Meet Eric Dobkin, director, insurance and risk management, for Merck & Co. Inc.
By: | September 28, 2018 • 5 min read

R&I: What was your first job?
My first job out of undergrad was as an actuarial trainee at Chubb.I was a math major in school, and I think the options for a math major coming out are either a teacher or an actuary, right? Anyway, I was really happy when the opportunity at Chubb presented itself. Fantastic company. I learned a lot there.

R&I: How did you come to work in risk management?
After I went back to get my MBA, I decided I wanted to work in corporate finance. When I was interviewing, one of the opportunities was with Merck. I really liked their mission, and things worked out. Given my background, they thought a good starting job would be in Merck’s risk management group. I started there, rotated through other areas within Merck finance but ultimately came back to the Insurance & Risk Management group. I guess I’m just one of those people who enjoy this type of work.

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R&I: What is risk management doing right?
I think the community is doing a good job of promoting education, sharing ideas and advancing knowledge. Opportunities like this help make us all better business partners. We can take these ideas and translate them into actionable solutions to help our companies.

R&I: What could the risk management community be doing a better job of?
I think we have made good advancements in articulating the value proposition of investing in risk management, but much more can be done. Sometimes there is such a focus on delivering immediate value, such as cost savings, that risk management does not get appropriate attention (until something happens). We need to develop better tools that can reinforce that risk management is value-creating and good for operational efficiency, customers and shareholders.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?
I’d actually say there hasn’t been as much change as I would have hoped. I think the industry speaks about innovation more often than it does it. To be fair, at Merck we do have key partners that are innovators, but some in the industry are less enthusiastic to consider new approaches. I think there is a real need to find new and relevant solutions for large, complex risks.

R&I: What emerging commercial risk most concerns you?
Cyber risk. While it’s not emerging anymore, it’s evolving, dynamic and deserves the attention it gets. Merck was an early adopter of risk transfer solutions for cyber risk, and we continue to see insurance as an important component of the overall cyber risk management framework. From my perspective, this risk, more than any other, demands continuous forward-thinking to ensure we evolve solutions.

R&I: What’s the biggest challenge you’ve faced in your career?
Sticking with the cyber theme, I’d say navigating through a cyber incident is right up there. In June 2017, Merck experienced a network cyber attack that led to a disruption of its worldwide operations, including manufacturing, research and sales. It was a very challenging environment. And managing the insurance claim that resulted has been extremely complex. But at the same time, I have learned a tremendous amount in terms of how to think about the risk, enterprise resiliency and how to manage through a cyber incident.

R&I: What advice might you give to students or other aspiring risk managers?
Have strong intellectual curiosity. Always be willing to listen and learn. Ask “why?” We deal with a lot of ambiguity in our business, and the more you seek to understand, the better you will be able to apply those learnings toward developing solutions that meet the evolving risk landscape and needs of the business.

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R&I: What role does technology play in your company’s approach to risk management?
We’re continuing to look for ways to apply technology. For example, being able to extract and leverage data that resides in our systems to evaluate risk, drive efficiencies and make things like property-value reporting easier. We’re also looking to utilize data visualization tools to help gain insights into our risks.

R&I: What are your goals for the next five to 10 years of your career?
I think, at this time, I would like to continue to learn and grow in the type of work I do and broaden my scope of responsibilities. There are many opportunities to deliver value. I want to continue to focus on becoming a stronger business partner and help enable growth.

R&I: What is your favorite book or movie?
I’d say right now Star Wars is top on my list. It has been magical re-watching and re-living the series I watched as a kid through the eyes of my children.

R&I: What is the riskiest activity you ever engaged in? When I was about 15, I went to a New York Rangers versus Philadelphia Flyers game at the Philadelphia Spectrum. I wore my Rangers jersey. I would not do that again.

Eric Dobkin, director, insurance & risk management, Merck & Co. Inc

R&I: What is it about this work you find most fulfilling or rewarding?
I am passionate about Merck’s mission of saving and improving lives. “Inventing for Life” is Merck’s tagline. It’s funny, but most people don’t associate “inventing” with medicine. But Merck has been inventing medicines and vaccines for many of the world’s most challenging diseases for a long time. It’s amazing to think the products we make can help people fight terrible diseases like cancer. Whatever little bit I can do to help advance that mission is very fulfilling and rewarding.

R&I: What do your friends and family think you do?
Ha! My kids think I make medicine. I guess they think that because I work for Merck. I suppose if even in a small way I can contribute to Merck’s mission of saving and improving lives, I am good with that. &




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]