It is well known that the trucking industry has endured many challenges over the past decade: year-over-year insurance-rate increases, higher medical costs, nuclear verdicts and/or social inflation; plus a driver shortage, aging workforce, increasing maintenance costs—you name it, the industry has weathered it.
Fleet managers are consistently looking for solutions to lower losses and maintain profitability, despite the myriad of factors working against them. From a risk and claims-management perspective, trimming costs in workers’ compensation could help accomplish this goal.
Workers’ Compensation Cost Drivers
According to the American Trucking Associations (ATA), trucks transported nearly 11.8 billion tons of freight in 2019, representing 72.5 percent of total domestic tonnage shipped. Yet, the industry supply of drivers has not met the demand for goods for nearly a decade. In 2018, the ATA reported the industry needed 60,800 more drivers to meet the demand, and if current trends continue, by 2028 the industry would need more than 160,000 additional drivers. The current pandemic ensures that driver shortages will remain a challenge for the industry.
When trucking companies are short-staffed, they often compensate by having their existing drivers work extra hours. In some cases, their work days can increase from eight hours to up to 14 hours—maxing out the Federal Motor Carrier Safety Administration hours-of-service rules. Consistently working longer hours can lead to an increase in work injuries due to fatigue, distraction, and overuse, thus increasing workers’ compensation claims and costs.
An aging workforce compounds the issues caused by the driver shortage. According to the ATA, the median age for over-the-road truckers is 46, and 57 for private fleets. While efforts have been made to recruit younger drivers, various factors make it harder to do so. Drivers must be 21 to obtain a CDL interstate license, and many insurance carriers are unwilling to insure truck drivers under the age of 24. Congress has proposed legislation to lower the minimum interstate driver age to 18, but that has yet to become law. Although drivers can obtain an intrastate license at 18 in most states, until regulations are passed lowering the age requirement to haul goods across state lines, there will continue to be a shortage of younger drivers.
Highlighting this trend, a Gallagher Bassett data analysis examining workers’ compensation claims data at 24 months maturity for accident years 2015-2018 found a larger percentage of trucking employees over 50 as compared to other industries, and higher average expenses and potential claim severity:
• 44 percent of trucking claims were for employees 50 and older, compared to 39 percent in all other industries.
• 31 percent of trucking claims were lost-time claims, compared to 23 percent for all other industries.
• Trucking claims (lost-time and medical-only) averaged $3,000 higher than the average across all industries.
Survivor benefits present an additional workers’ compensation cost factor in the trucking industry. In many cases, these costs can reach beyond $1 million, depending on the jurisdiction and circumstances of injury. A few large losses, or even just one, can impact the expected costs of a workers’ compensation program and the continued viability of a trucking company.
Claims-Management Strategies
Although the challenges associated with driver shortages and an existing aging workforce won’t disappear anytime soon, there are effective risk and claims-management strategies that help reduce workers’ compensation claims costs. They include telematics, nurse case management, and modified work programs.
Telematics. Most of the top fleets in the United States have introduced some type of telematics or safety features to their fleet, recognizing the return on investment. In particular, collision-avoidance technology, auto-braking systems and video captures help reduce both the frequency and severity of loss. In fact, a recent study from the Insurance Institute for Highway Safety (IIHS) found that equipping large trucks with forward-collision warning and automatic emergency-braking (AEB) systems could eliminate more than two out of five crashes in which a large truck rear-ends another vehicle.
Making an investment upfront in telematics can help in the long run, reducing the frequency and severity of accidents and, ultimately, protecting drivers from workplace injuries.
Nurse Case Management. For optimal claim outcomes, it is important to report a claim and assign a nurse or telephonic case manager (TCM), if required, in a timely manner. A Gallagher Bassett analysis of all claims across industries with TCM assignments found that a claim that is assigned a TCM within 30 days after an injury is reported has a 40 percent lower cost and a 41 percent lower duration than a claim that is assigned a TCM after 180 days.
Although many employees benefit from TCM assignments, the challenge is identifying those employees most in need of help without assigning TCMs across the board, which can add unnecessary expense and friction to some claims. Using clinical guidance with an artificial intelligence (AI) component can quickly identify claims that would benefit from a nurse assignment while reducing wasteful referrals. The AI tool reviews claims and the treatment details to uncover hidden health risks to the injured employee. This is especially helpful for trucking clients with unique challenges, including older employees with comorbid conditions.
Many trucking employees may have a desire to get back to work before they are physically ready. Others may need additional help to prepare for a return to the physical demands of their job. In both of these situations, a nurse or TCM will ensure they are receiving appropriate medical care with providers who follow evidence-based medicine. This clinical support will help to expedite recovery and promote a safe return to work.
Modified work. While some injuries prevent employees from performing the essential functions of their job, trucking fleets can modify an employee’s work during his recovery by setting limits on physical labor and the number of hours and days he works per week—known as a modified work program.
Onsite, an injured employee in a modified work program, for example, could assist the dispatcher; provide guidance to new drivers; and perform safety checks on required equipment. In other cases, trucking companies may partner with an outside organization or nonprofit to give the injured employee modified work. Remaining active in the community improves their self-esteem despite their medical condition. In the current pandemic, modified work has also translated into work-from-home duties, such as reviewing telematics data and coaching drivers virtually.
Modified work eases injured employees back into the work environment while enabling them to feel valued and productive. Those enrolled in modified work are more likely to return to work sooner than those who do not participate in such a program. According to the Job Accommodation Network, the likelihood of an injured worker returning to work drops to 50 percent if the employee is off work more than 12 weeks.
Given the challenges the trucking industry has faced over the last decade, plus an uncertain economy due to the pandemic, it is more imperative than ever to find solutions for trucking fleets to trim costs. Installing telematics and providing both nurse case management and modified work programs are solutions that can provide workers’ compensation claims relief, helping trucking companies remain profitable so they can continue to provide the services our country depends on.