Here’s what I see coming.
Quick take – what happens this fall and winter will bump up premiums, injury rates and claims costs.
Insurers will see rising premiums, claims service entities more work, and some insurers and re-insurers’ bottom lines will be hit hard.
Companies focused on servicing work comp patients in Texas and Florida are going to be very busy.
Hurricanes are the “why”
Harvey, Irma, and as-yet-unnamed storms are likely to make this the worst of all hurricane seasons – and we’re nowhere close to the end of the season.
Harvey alone may cost close to $200 billion. With Irma – now a Category 5 hurricane with winds over 175 miles per hour – storm tracks favoring a Florida landfall, we could be looking at a second blockbuster bill. (note cost projections are all over the map
There are huge implications for the workforce – starting with public safety workers, moving to clean-up crews and workers making emergency repairs. Then comes re-building: residential, public, commercial, and industrial construction, plus repairs to infrastructure.
Remediation will follow and take years. The huge petro-chemical operations around Houston mean waterways and land will be seriously polluted.
And, hopefully, big changes to storm and climate change mitigation planning, which will require major investments as well will mean billions in spending and lots of work for construction workers
Roads, water and sewage systems, rail, power generation and transmission, pipelines, ports and terminals, communications infrastructure all were hammered by Harvey and Irma may be just as brutal.
Implications.
Higher payrolls – Hundreds of thousands of workers will be needed today, next month, and for years to come. They will be working in high-frequency, high-severity jobs, and many may be poorly trained and supervised. And good, experienced workers will be costly due to supply-and-demand.
It’s highly likely tens of thousands will be undocumented; our governmental leaders will have to decide whether they are going to strictly enforce immigration laws or turn a blind eye.
Labor fraud – I’m betting a large percentage of clean-up and construction workers will be undocumented, which means a likely explosion in labor fraud. Unscrupulous employers will bid on clean-up work, knowing they can screw immigrants out of pay and those workers have no recourse.
Higher injury rates – inexperienced workers putting in massive hours in dangerous places doing dangerous work = lots of bad injuries, plus exposure to nasty chemicals and pollutants.
What does this mean for you?
We’re about to see the most significant change in workers’ comp in decades.
Joe,
It will be interesting to see how many workers come to low benefit Texas from high benefit states and get injured, whether they are paid or volunteer workers, and what is the domicile of the employer. There could be a lot of cross-state claim activity. This whole issue could be very confusing especially when it comes to determining the applicable benefits and in which state the payroll and losses are allocated.
Jeffrey – thanks for the note – excellent observation. Also how many will work for non-subscribers, how many will be without coverage, what will happen to them if they get hurt, who pays for their treatment and lost wages…
When will humans stop “ducking” and take actions to try to mitigate/slow hurricane damage? We have many tools that would need to be considered but if one hurricane causes the loss of hundreds of lives and literally hundreds of billions of dollars, shouldn’t we start to research a valid and eco-friendly counterattack?
Joe — good report and I entirely agree. That said, there is one other “failure” left out: With Texas being an optional state, many employers and their workers involved in cleanup and rebuilding will not be covered by workers’ compensation. This will result in injuries not being reported through the comp system and a further significant cost-shift to public and other payers. A PCI estimate in 2016 of the estimated cost shift of medical alone as over half a billion annually — before Harvey! So, Texas employers will be complicit in transferring enormous costs they should bear as employers to taxpayers and through other non-reimbursed care mechanisms. Great public policy result.
Bruce. Excellent points.
Instead of even attempting to refute the many reports published over the past two years that demonstrate better medical outcomes and better wage replacement benefits for workers under Texas injury benefit plans, it’s sad and quite remarkable to see yet another attempt to exploit the heart ache and homelessness of thousands of displaced families to advance a workers’ comp industry status quo. And continuing to cite a PCI cost-shifting study that relies solely on workers’ comp industry (not Texas nonsubscription) data? Really? This conversation could more productively focus on how best to address the hurricane implications Joe deftly predicts.
With 27 years of daily experience providing Texas employer responses to employee injuries, I disagree in the large leap that TEXAS Elective Emploer Option will.drive uninsured position of the labor force. 1st b/c any work paid by political subdivision must have WC. This will be a big number of loss paid. But the homeowner that is now dealing with rebuild is no different than before regarding coverage. How many HO gets proof WC? and, this is no different in any other state when homeowners deal with a loss. What about states with independent contractor exemptions for coverage. How different than Texas?
I do see TEXAS can do attitude kicking in. The ease at which a writer assumes an Elective Option Employer is unresponsive to their employee injuries is just offensive. Offensive b/c tens of thousands of employees are insured..offensive to professional claims folks providing 100 million in injury benefits each year. Any implied lack of employee fairness by Elective Employer can only exist b/c of a lack of time with employers and claims teams. These employers are reliable who have provided injury protection serviced by professional claims through defined benefit plan for medical, wage replacement etc..
Any injury is bad. One without assistance and guidance is worst of all. Elective Employer is a proven pre planned response with the single goal of 100 % best outcome for employee.
Jerry welcome to mcm. There’s no question many larger Employers do a good job. that is NOT always true for smaller employers or labor brokers.