How the Remote and Gig Employment Landscape Is Changing the Future of Workers’ Comp
It’s no secret that today’s workplace is changing rapidly. A month ago, you’d probably be reading these words from a desktop in a cubicle. Now, due to the rapid spread of COVID-19, you’re likely reading them from a home office in your pajamas.
Since 1911, when workers’ compensation began in response to the industrial revolution, the workplace has undergone periods of significant change, and the industry hasn’t always been able to keep up.
Gone or at least dramatically reduced are the heavy lifting injuries that dominated the industrial workforce. Now workers’ compensation professionals are trying to figure out how to navigate it all.
“As we get into today’s workplaces, we have different kinds of situations,” said Jeff Pettegrew, chief policy officer at the Association for Responsible Alternatives to Workers’ Compensation. “If you go back to its roots, workers’ comp was basically if you got hurt on the job, we’ll take care of you, we’ll pay you … but it’s much more complicated now.”
“We understood what the definitions of work were. We understood that it tended to be physical. There were specific locations that you went to and you were employed by a single company, maybe two companies,” added Ward Ching, managing director at Aon. “Today that’s not the case.”
Pettegrew and Ching spoke with Chris Mandel, senior vice president of strategic solutions and director of the Sedgwick Institute, about the future of workers’ compensation during a webinar at the Future of Risk virtual conference.
During the webinar, they discussed WCRI founder Dr. Richard Victor’s book, Scenarios for the 2030s: Threats and Opportunities for Workers’ Compensation Systems, and how factors, such as the changing ways we work and Insurtech, will affect the industry.
The Changing Ways We Work
One of the biggest ways today’s workforce differs from the past is the emergence of the gig worker.
Categorized as independent contractors by many, gig workers are those who work for app-based companies, such as Uber, Lyft and Postmates, and do not currently receive workers’ compensation benefits, though some states have tried to change that.
“They’re defined not as employees, not as contractors, but something in-between. What that suggests is that if there’s a workplace injury, that injury will not be charged to a workers’ compensation program,” Ching said.
“The question now becomes what happens in the cost shift in the economy? Are we looking at a legacy workers’ compensation program that is, by definition, cost shifting towards the legacy businesses… who will bear responsibilities as opposed to the new companies that come on board and claim ‘I don’t have employees, so I don’t need a workers’ compensation program.’”
“The system is very old. It’s been put together like an old steam engine and it’s still on the tracks. We really need to look at ways to modernize the delivery of a good benefits system.” — Jeff Pettegrew, chief policy officer, Association for Responsible Alternatives to Workers’ Compensation
In addition to tech companies and gig workers stretching the limits of the system, remote work is also raising questions as it can be difficult to tell if remotely occurring injuries arose out of the course of employment or not.
As COVID-19 accelerates the shift to remote work, these questions are likely to loom even larger over the next few years.
“I think there’s going to be some significant learning from COVID-19 with [working from home] around what are the cost variables and the potential productivity variables associated with this kind of work style and the question of workers’ compensation will come in,” Ching said.
The jobs of tomorrow will not wait, however, even if the workers’ compensation system lags behind.
Tech companies, in Ward’s view, will continue to innovate and push out products, regardless of whether or not their business model makes sense with current workers’ compensation practices.
“They’re not going to wait. They’re going to continue to break the process, look for new minimally viable products and services and push ahead,” Ching said. “They don’t have a concern about whether or not the regulatory structure, or the workers’ compensation system is rational.”
As a result, workers’ compensation will need to try to catch up to the jobs of tomorrow if it’s going to survive at all.
“If [the] system is going to survive in any sort of way, and for certain businesses it absolutely needs to, it’s going to have to play catch up,” Ching said.
Insurtech and Risk Tech May Be the Way Forward
One way that the workers’ compensation system can play catch up to changing workplaces is by embracing insurtech, risk tech and other tools that could disrupt the system.
“There’s no doubt in my mind that the use of technology and this disruptive process is going to be critical moving ahead because we have to have much more efficiency in delivering whatever we’re going to deliver here,” Pettegrew said.
“The system is very old. It’s been put together like an old steam engine and it’s still on the tracks. We really need to look at ways to modernize the delivery of a good benefits system.”
Ching agreed that the system needs disrupting.
“I think that there is significant motivation on the part of insurance to look at not just workers’ compensation, but insurance in total to figure out new ways to deliver… bigger, faster, better, products and services,” he said. &