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Where Workers’ Comp Can Do Better for First Responders

Including first responder mental health coverage in workers’ compensation calls for a shift in the definitions of a workplace injury and compensable treatment.
By: | August 10, 2017 • 5 min read

In 2012, police officers and paramedics were called to Sandy Hook Elementary School in response to a shooting that took the lives of 28 people, mostly children. In 2015, chaos erupted at an office holiday party in San Bernardino when a gunman and his wife opened fire on his colleagues. In 2016, first responders converged on Pulse nightclub in Orlando to stop a shooter who cornered many of his victims inside.

Those are perhaps the most newsworthy stories of violence and terror that have gripped the American psyche in recent years, but similar scenes have occurred in a total of 40 states across the country.

In their wake, first responders who see the carnage firsthand are left to grapple with the psychological ramifications of tragedy.

“States are seeing how these traumatic events impact first responders and are starting to ask, how can we help the people that we send into these horrible situations?” said Danielle Jaffee, Manager of Government Affairs, IWP. “The problem is that existing workers’ compensation statutes were not written to accommodate first responders specifically, or mental health claims in general.”

Including first responder mental health coverage in workers’ compensation calls for a shift in how state legislatures define a workplace injury, and how they think about compensable treatment.

Legislative Challenges

Danielle Jaffee, Manager of Government Affairs

States fall into one of two buckets: first, there are the states that require a physical injury to be attached to a workers’ comp claim. For those states, redefining what qualifies as an injury will be the biggest obstacle in incorporating mental health care into workers’ compensation.

“In many states, a physical component is a requirement to file a workers’ comp claim,” Jaffee said. “If you have a broken bone, we can clearly see that on an X-ray, we know it needs a cast, and we know it will take about eight weeks to heal.”

Intangible mental injuries like post-traumatic stress disorder cannot always be objectively and definitively identified, and the treatment plans are less clear-cut. Allowing workers’ comp claims for this type of injury introduces uncertainty that not all lawmakers are comfortable with.

“We don’t know how many people will file a claim, how long they will need care for, and what the cost will add up to,” Jaffee said. “And of course no one can predict when the next traumatic incident will occur or what its scale could be.”

And when the claimants are publicly-employed first responders, the burden of paying for care falls on the shoulders of cities, towns and municipalities — entities often saddled with very limited budgets. The combination of claim unpredictability and potentially unaffordable care is what keeps many states from getting legislative measures passed.

“Discussions in those states are centered on the best way to add mental health care to workers’ comp without a physical injury, so that they can take care of first responders without overtaxing the system,” Jaffee said.

Then there are states that fall into the second bucket: those that do allow workers’ comp claims for mental health injuries, but stipulate that the event that triggered the claim must be outside of the normal scope of the claimant’s work.

“That would automatically exclude first responders,” Jaffee said. “Being in dangerous and traumatic situations naturally falls within their job descriptions.”

So for these states, the question at the center of the debate is: who should get coverage?

If they remove the exclusion that the triggering event must be out of the ordinary, every employee in the state could reasonably find grounds to file a mental health claim, which increases the likelihood of fraud and the cost that comes with it.

“Everyone experiences stress at work — but everyday stresses cannot be the basis of a workers’ comp claim,” Jaffee said. “Statutes need to include language that specifies mental health coverage — without a physical component — that applies only to first responders. This will help to contain the claims.”

State of the States

Despite the legislative challenges, the need to care for first responders’ mental health is no longer something states can push aside. Our 24/7 news cycle that readily broadcasts the aftermath of violence and disaster, combined with increased awareness around PTSD and mental health in general, have spurred efforts to make an old system work for a modern day problem.

“Since 2012, we’ve seen 10 to 15 states examining ways to help our first responders amid an increase of PTSD claims,” Jaffee said. “Connecticut really lead the charge after the Sandy Hook shooting brought this issue to the forefront.”

But five years later, Connecticut is still trying to find a way to make it work. A bill that would include coverage for PTSD when a first responder witnesses the death or aftermath of death in the line of duty, regularly fails to pass out of the legislature.

Florida, Texas, Maine, Colorado, Minnesota, California and Vermont are among others examining the issue. Florida introduced legislation this year to allow claims of mental health ailments without a physical injury, and Texas proposed a bill to presume that PTSD in first responders was related to their job, provided it was not diagnosed earlier.  In Ohio, though no bill is in the works, police officers have been lobbying for years to have mental health care provided by the workers’ comp system.

“They are recognizing the need for this care among their members,” Jaffee said. “But it is a unique problem for each state because the language of workers’ comp statutes varies across the country.”

Advocating for Change

As the “patient advocate pharmacy,” IWP tracks the regulatory and legislative updates across all 50 states and engages with lawmakers, insurers, physicians and patients to bring discussion around the issue into the spotlight and keep the conversation going.

“Seven to eight percent of American adults, or roughly eight million people, will have PTSD in their lifetime,” Jaffee said. “We’ve seen the need for mental health care among our patients and asked ourselves, ‘is this an injury we can help to heal?’”

Jaffee and the rest of the Government Affairs team at IWP aim to educate workers’ comp stakeholders through face-to-face meetings and informational whitepapers. They also work to afford injured workers a voice by weighing in on proposed legislation through public comments.

“We’re trying to spark the conversation around the mental health care needs of first responders, because doing so will ultimately help them gain access to the services they need to go back to work,” Jaffee said. “We support efforts that states are making to work through a complicated issue to better serve their workers.”

To learn more, visit https://www.iwpharmacy.com/.



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

IWP is a national home delivery pharmacy service working as an advocate for injured individuals. Fully licensed in 48 states, IWP enhances patient access and alleviates administrative and financial burdens.

Risk Focus: Cyber

Expanding Cyber BI

Cyber business interruption insurance is a thriving market, but growth carries the threat of a mega-loss. 
By: | March 5, 2018 • 7 min read

Lingering hopes that large-scale cyber attack might be a once-in-a-lifetime event were dashed last year. The four-day WannaCry ransomware strike in May across 150 countries targeted more than 300,000 computers running Microsoft Windows. A month later, NotPetya hit multinationals ranging from Danish shipping firm Maersk to pharmaceutical giant Merck.


Maersk’s chairman, Jim Hagemann Snabe, revealed at this year’s Davos summit that NotPetya shut down most of the group’s network. While it was replacing 45,000 PCs and 4,000 servers, freight transactions had to be completed manually. The combined cost of business interruption and rebuilding the system was up to $300 million.

Merck’s CFO Robert Davis told investors that its NotPetya bill included $135 million in lost sales plus $175 million in additional costs. Fellow victims FedEx and French construction group Saint Gobain reported similar financial hits from lost business and clean-up costs.

The fast-expanding world of cryptocurrencies is also increasingly targeted. Echoes of the 2014 hack that triggered the collapse of Bitcoin exchange Mt. Gox emerged this January when Japanese cryptocurrency exchange Coincheck pledged to repay customers $500 million stolen by hackers in a cyber heist.

The size and scope of last summer’s attacks accelerated discussions on both sides of the Atlantic, between risk managers and brokers seeking more comprehensive cyber business interruption insurance products.

It also recently persuaded Pool Re, the UK’s terrorism reinsurance pool set up 25 years ago after bomb attacks in London’s financial quarter, to announce that from April its cover will extend to include material damage and direct BI resulting from acts of terrorism using a cyber trigger.

“The threat from a cyber attack is evident, and businesses have become increasingly concerned about the extensive repercussions these types of attacks could have on them,” said Pool Re’s chief, Julian Enoizi. “This was a clear gap in our coverage which left businesses potentially exposed.”

Shifting Focus

Development of cyber BI insurance to date reveals something of a transatlantic divide, said Hans Allnutt, head of cyber and data risk at international law firm DAC Beachcroft. The first U.S. mainstream cyber insurance products were a response to California’s data security and breach notification legislation in 2003.

Jimaan Sané, technology underwriter, Beazley

Of more recent vintage, Europe’s first cyber policies’ wordings initially reflected U.S. wordings, with the focus on data breaches. “So underwriters had to innovate and push hard on other areas of cyber cover, particularly BI and cyber crimes such as ransomware demands and distributed denial of service attacks,” said Allnut.

“Europe now has regulation coming up this May in the form of the General Data Protection Regulation across the EU, so the focus has essentially come full circle.”

Cyber insurance policies also provide a degree of cover for BI resulting from one of three main triggers, said Jimaan Sané, technology underwriter for specialist insurer Beazley. “First is the malicious-type trigger, where the system goes down or an outage results directly from a hack.

“Second is any incident involving negligence — the so-called ‘fat finger’ — where human or operational error causes a loss or there has been failure to upgrade or maintain the system. Third is any broader unplanned outage that hits either the company or anyone on which it relies, such as a service provider.”

The importance of cyber BI covering negligent acts in addition to phishing and social engineering attacks was underlined by last May’s IT meltdown suffered by airline BA.

This was triggered by a technician who switched off and then reconnected the power supply to BA’s data center, physically damaging servers and distribution panels.

Compensating delayed passengers cost the company around $80 million, although the bill fell short of the $461 million operational error loss suffered by Knight Capital in 2012, which pushed it close to bankruptcy and decimated its share price.

Mistaken Assumption

Awareness of potentially huge BI losses resulting from cyber attack was heightened by well-publicized hacks suffered by retailers such as Target and Home Depot in late 2013 and 2014, said Matt Kletzli, SVP and head of management liability at Victor O. Schinnerer & Company.


However, the incidents didn’t initially alarm smaller, less high-profile businesses, which assumed they wouldn’t be similarly targeted.

“But perpetrators employing bots and ransomware set out to expose any firms with weaknesses in their system,” he added.

“Suddenly, smaller firms found that even when they weren’t themselves targeted, many of those around them had fallen victim to attacks. Awareness started to lift, as the focus moved from large, headline-grabbing attacks to more everyday incidents.”

Publications such as the Director’s Handbook of Cyber-Risk Oversight, issued by the National Association of Corporate Directors and the Internet Security Alliance fixed the issue firmly on boardroom agendas.

“What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.” — Jimaan Sané, technology underwriter, Beazley

Reformed ex-hackers were recruited to offer board members their insights into the most vulnerable points across the company’s systems — in much the same way as forger-turned-security-expert Frank Abagnale Jr., subject of the Spielberg biopic “Catch Me If You Can.”

There also has been an increasing focus on systemic risk related to cyber attacks. Allnutt cites “Business Blackout,” a July 2015 study by Lloyd’s of London and the Cambridge University’s Centre for Risk Studies.

This detailed analysis of what could result from a major cyber attack on America’s power grid predicted a cost to the U.S. economy of hundreds of billions and claims to the insurance industry totalling upwards of $21.4 billion.

Lloyd’s described the scenario as both “technologically possible” and “improbable.” Three years on, however, it appears less fanciful.

In January, the head of the UK’s National Cyber Security Centre, Ciaran Martin, said the UK had been fortunate in so far averting a ‘category one’ attack. A C1 would shut down the financial services sector on which the country relies heavily and other vital infrastructure. It was a case of “when, not if” such an assault would be launched, he warned.

AI: Friend or Foe?

Despite daunting potential financial losses, pioneers of cyber BI insurance such as Beazley, Zurich, AIG and Chubb now see new competitors in the market. Capacity is growing steadily, said Allnutt.

“Not only is cyber insurance a new product, it also offers a new source of premium revenue so there is considerable appetite for taking it on,” he added. “However, whilst most insurers are comfortable with the liability aspects of cyber risk; not all insurers are covering loss of income.”

Matt Kletzli, SVP and head of management liability, Victor O. Schinnerer & Company

Kletzli added that available products include several well-written, broad cyber coverages that take into account all types of potential cyber attack and don’t attempt to limit cover by applying a narrow definition of BI loss.

“It’s a rapidly-evolving coverage — and needs to be — in order to keep up with changing circumstances,” he said.

The good news, according to a Fitch report, is that the cyber loss ratio has been reduced to 45 percent as more companies buy cover and the market continues to expand, bringing down the size of the average loss.

“The bad news is that at cyber events, talk is regularly turning to ‘what will be the Hurricane Katrina-type event’ for the cyber market?” said Kletzli.

“What’s worse is that with hurricane losses, underwriters know which regions are most at risk, whereas cyber is a global risk and insurers potentially face huge aggregation.”


Nor is the advent of robotics and artificial intelligence (AI) necessarily cause for optimism. As Allnutt noted, while AI can potentially be used to decode malware, by the same token sophisticated criminals can employ it to develop new malware and escalate the ‘computer versus computer’ battle.

“The trend towards greater automation of business means that we can expect more incidents involving loss of income,” said Sané. “What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.

“We’re likely to see a growing number of attacks where the aim is to cause disruption, rather than demand a ransom.

“The paradox of cyber BI is that the more sophisticated your organization and the more it embraces automation, the bigger the potential impact when an outage does occur. Those old-fashioned businesses still reliant on traditional processes generally aren’t affected as much and incur smaller losses.” &

Graham Buck is editor of gtnews.com. He can be reached at riskletters.com.