Mental Injury

Rising Workplace Stress Has Big Impact on Comp

In a trend that shows no sign of reversing, American workers are reporting higher levels of stress, which contributes to injuries and illness and hinders recovery.
By: | January 26, 2015 • 4 min read

Eight out of every ten American workers report being stressed by at least one thing at work, according to a study by Nieslen, a market research firm. Long commutes, too-heavy workloads coupled with stagnant pay, and poor work-life balance account for the top stress-inducers.

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The impact of poor mental health on physical recovery is well-known in the workers’ comp world, but as stress and anxiety become bigger issues in the workforce, it’s worth taking a longer look at how high levels of stress affect claims, and what employers can do to mitigate those effects.

States vary in how they approach claims of mental or psychological injuries at work, but by and large they are not compensable.

The employee bears the burden of proving that their mental condition — usually anxiety or depression — rose directly out of some extraordinary circumstance of their employment; normal workplace demands are not deemed sufficient reasons for a claim.

“Stress has a negative impact on overall health and return to work outcomes, and a growing body of evidence supports that.” — Trey Gillespie, senior director, workers’ compensation, Property Casualty Insurers Association of America

“There’s a lot of variance, but most states don’t recognize any form of mental-mental dynamic in terms of a compensable workers’ comp claim,” said Trey Gillespie, senior director, workers’ compensation at the Property Casualty Insurers Association of America.

“Typical work-related stresses, in terms of getting work done and dealing with bosses and co-workers, are generally not a basis for a claim.”

“There are circumstances in which an employee can be compensated for workplace stress, but there are a lot of ‘buts’,” said Bruce Wood, vice president and associate general counsel, American Insurance Association. “States have erected speed bumps or barriers that a claimant would have to pass to be compensated.”

Those speed bumps include higher evidentiary standards for compensability.

Employees must present a preponderance of evidence that clearly and convincingly establishes their work environment as the primary cause for their psychiatric condition — a tall order when other stress-inducing factors like personal finances or troubles at home come into play.

In most states, in order for a mental condition to be compensable, it must be accompanied by some sort of physical injury.

But again, proving that mental stress led to a physical disorder — such as a heart attack, high blood pressure, or other cardiovascular condition — can be difficult.

That’s why these types ‘mental-physical’ claims are not common, but could see an uptick if U.S. workers continue to report high levels of stress connected to unreasonable workloads or long hours.

Specific Exceptions

Some states make exceptions for causes involving PTSD or depression stemming from either experiencing or witnessing a traumatic injury. Connecticut, for example, strictly prohibits mental-mental claims with no physical component, but is seeking legislative amendments to its workers’ compensation act after the Sandy Hook school shootings in 2012.

“Teachers and first responders came upon a horrific scene, and may face PTSD or other emotional distress,” Wood said.

“There’s an attempt to change the law to eliminate the prohibition on mental-mental, or to specifically state that where a trauma is witnessed, that trauma constitutes a physical component of a valid claim.”

Even where mental stress does not constitute a compensable claim, everyday pressures and anxiety nonetheless worsen the outlook of a purely physical claim.

“If a worker has an injury and is trying to get back to their norm, meaning getting back to work in some capacity and back to their usual routine, anything that delays that recovery can trigger some psychological conditions,” said Deirdre Doyle, vice president of quality and continuing education at Procura, a Healthcare Solutions company. “That could be stress, anxiety, depression or all three.”

Doyle also said she believes workers’ comp payers will see more mental health issues as secondary diagnoses on claims going forward.

“Stress has a negative impact on overall health and return to work outcomes, and a growing body of evidence supports that,” Gillespie said.

The good news is that, while stress-free work environments may never be the norm, employers are becoming more receptive to employees’ mental health needs.

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“There’s been a trend for the past 20 years or so in which employers fully understand how day-to-day work environment affects performance and also length of time off due to injury,” Gillespie said.

“There are proactive movements in human resources departments to create environments where employees feel valued, and to not set an adversarial tone if a worker becomes injured.”

However stress comes into play during a claim, whether as a contributing factor to or result of a physical condition, it’s clear that employers and their workers’ comp providers can improve outcomes and save dollars by recognizing the mental component of an injury early and attentively.

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

More from Risk & Insurance

More from Risk & Insurance

High Net Worth

High Net Worth Clients Live in CAT Zones. Here’s What Their Resiliency Plan Should Include

Having a resiliency plan and practicing it can make all the difference in a disaster.
By: | September 14, 2018 • 7 min read

Packed with state-of-the-art electronics, priceless collections and high-end furnishings, and situated in scenic, often remote locations, the dwellings of high net worth individuals and families pose particular challenges when it comes to disaster resiliency. But help is on the way.

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Armed with loss data, innovative new programs, technological advances, and a growing army of niche service-providers aimed at addressing an astonishingly diverse set of risks, insurers are increasingly determined to not just insure against their high net worth clients’ losses, but to prevent them.

Insurers have long been proactive in risk mitigation, but increasingly, after the recent surge in wildfire and storm losses, insureds are now, too.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy,” said Laura Sherman, founding partner at Baldwin Krystyn Sherman Partners.

And especially in the high net worth space, preventing that loss is vastly preferable to a payout, for insurers and insureds alike.

“If insurers can preserve even one house that’s 10 or 20 or 40 million dollars … whatever they have spent in a year is money well spent. Plus they’ve saved this important asset for the client,” said Bruce Gendelman, chairman and founder Bruce Gendelman Insurance Services.

High Net Worth Vulnerabilities

Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

As the number and size of luxury homes built in vulnerable areas has increased, so has the frequency and magnitude of extreme weather events, including hurricanes, harsh cold and winter storms, and wildfires.

“There is a growing desire to inhabit this riskier terrain,” said Jason Metzger, SVP Risk Management, PURE group of insurance companies. “In the western states alone, a little over a million homes are highly vulnerable to wildfires because of their proximity to forests that are fuller of fuel than they have been in years past.”

Such homes are often filled with expensive artwork and collections, from fine wine to rare books to couture to automobiles, each presenting unique challenges. The homes themselves present other vulnerabilities.

“Larger, more sophisticated homes are bristling with more technology than ever,” said Stephen Poux, SVP and head of Risk Management Services and Loss Prevention for AIG’s Private Client Group.

“A lightning strike can trash every electronic in the home.”

Niche Service Providers

A variety of niche service providers are stepping forward to help.

Secure facilities provide hurricane-proof, wildfire-proof off-site storage for artwork, antiques, and all manner of collectibles for seasonal or rotating storage, as well as ahead of impending disasters.

Other companies help manage such collections — a substantial challenge anytime, but especially during a crisis.

“Knowing where it is, is a huge part of mitigating the risk,” said Eric Kahan, founder of Collector Systems, a cloud-based collection management company that allows collectors to monitor their collections during loans to museums, transit between homes, or evacuation to secure storage.

“Before, insurance was considered the only step in risk management. Now, our client families realize it is one of the many imperative steps in an effective risk management strategy.” — Laura Sherman, founding partner, Baldwin Krystyn Sherman Partners

Insurers also employ specialists in-house. AIG employs four art curators who advise clients on how to protect and preserve their art collections.

Perhaps the best known and most striking example of this kind of direct insurer involvement are the fire teams insurers retain or employ to monitor fires and even spray retardant or water on threatened properties.

High-Level Service for High Net Worth

All high net worth carriers have programs that leverage expertise, loss data, and relationships with vendors to help clients avoid and recover from losses, employing the highest levels of customer service to accomplish this as unobtrusively as possible.

“What allows you to do your job best is when you develop that relationship with a client, where it’s the same people that are interacting with them on every front for their risk management,” said Steve Bitterman, chief risk services officer for Vault Insurance.

Site visits are an essential first step, allowing insurers to assess risks, make recommendations to reduce them, and establish plans in the event of a disaster.

“When you’re in a catastrophic situation, it’s high stress, time is of the essence, and people forget things,” said Sherman. “Having a written plan in place is paramount to success.”

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Another important component is knowing who will execute that plan in homes that are often unoccupied.

Domestic staff may lack the knowledge or authority to protect the homeowner’s assets, and during a disaster may be distracted dealing with threats to their own homes and families. Adequate planning includes ensuring that whoever is responsible has the training and authority to execute the plan.

Evaluating New Technology

Insurers use technologies like GPS and satellite imagery to determine which homes are directly threatened by storms or wildfires. They also assess and vet technologies that can be implemented by homeowners, from impact glass to alarm and monitoring systems, to more obscure but potentially more important options.

AIG’s Poux recommends two types of vents that mitigate important, and unexpected risks.

“There’s a fantastic technology called Smart Vent, which allows water to flow in and out of the foundation,” Poux said. “… The weight of water outside a foundation can push a foundation wall in. If you equalize that water inside and out at the same level, you negate that.”

Another wildfire risk — embers getting sucked into the attic — is, according to Poux, “typically the greatest cause of the destruction of homes.” But, he said, “Special ember-resisting venting, like Brandguard Vents, can remove that exposure altogether.”

Building Smart

Many disaster resiliency technologies can be applied at any time, but often the cost is fractional if implemented during initial construction. AIG’s Smart Build is a free program for new or remodeled homes that evolved out of AIG’s construction insurance programs.

Previously available only to homes valued at $5 million and up, Smart Build recently expanded to include homes of $1 million and up. Roughly 100 homes are enrolled, with an average value of $13 million.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work.” — Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“We know what goes wrong in high net worth homes,” said Poux, citing AIG’s decades of loss data.

“We’re incenting our client and by proxy their builder, their architects and their broker, to give us a seat at the design table. … That enables us to help tweak the architectural plans in ways that are very easy to do with a pencil, as opposed to after a home is built.”

Poux cites a remote ranch property in Texas.

Curt Goetsch, head of underwriting, Private Client Group, Ironshore

“The client was rebuilding a home but also installing new roads and grading and driveways. … The property was very far from the fire department and there wasn’t any available water on the property.”

Poux’s team was able to recommend underground water storage tanks, something that would have been prohibitively expensive after construction.

“But if the ground is open and you’ve got heavy equipment, it’s a relatively minor additional expense.”

Homes that graduate from the Smart Build program may be eligible for preferred pricing due to their added resilience, Poux said.

Recovery from Loss

A major component of disaster resiliency is still recovery from loss, and preparation is key to the prompt service expected by homeowners paying six- or seven-figure premiums.

Before Irma, PURE sent contact information for pre-assigned claim adjusters to insureds in the storm’s direct path.

“In the high net worth space, sometimes it takes longer potentially to recover, simply because there are limited contractors available to do specialty work,” said Curt Goetsch, head of underwriting for Ironshore’s Private Client Group.

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“If you’ve got custom construction or imported materials in your house, you’re not going to go down the street and just find somebody that can do that kind of work, or has those materials in stock.”

In the wake of disaster, even basic services can be scarce.

“Our claims and risk management departments have to work together in advance of the storm,” said Bitterman, “to have contractors and restoration companies and tarp and board services that are going to respond to our company’s clients, that will commit resources to us.”

And while local agents’ connections can be invaluable, Goetsch sees insurers taking more of that responsibility from the agent, to at least get the claim started.

“When there is a disaster, the agency’s staff may have to deal with personal losses,” Goetsch said. &

Jon McGoran is a novelist and magazine editor based outside of Philadelphia. He can be reached at [email protected]