It has been heartening—especially over the last few years—to see more founders and investors take an interest in the U.S. workers’ compensation and safety innovation sector. Why? Because American workers need better safety innovation, and they need it now—just as their employers need better resources to reduce claims frequency and eliminate accidents in the workplace.
According to the “Census of Fatal Occupational Injuries Summary” annual report, released by the U.S. Bureau of Labor Statistics in December 2022, we saw the following alarming statistics:
- A 9% increase in the number of fatal accidents in 2021 over the previous year’s data.
- A 3.6 fatal occupational injury rate in 2021, which represents the steepest climb in the annual rate since 2016.
- Strikingly: “a worker died every 101 minutes from a work-related injury in 2021.”
- Construction and extraction occupations had the second most occupational deaths (951) in 2021.
- Installation, maintenance, and repair occupations was another notable leader, with 475 fatalities in 2021, an increase of 20.9 percent.
- The disproportionate effect in black, indigenous, and people of color: Black and Latino workers had fatality rates (4.0 and 4.5 per 100,000 FTE workers, respectively) in 2021 that were higher than the all-worker rate of 3.6.
What Is Driving This Data?
It comes as no surprise, of course, that the risk of injury and death increases for workers in higher hazard occupations, such as construction, manufacturing, and agriculture. These industries are still facing widespread labor shortages, skilled workers aging out of the workforce, and the consequences of workers being busier than ever, which leads to stress, mental strain, increased likelihood of injury, to name just a few factors.
Nationwide labor shortages often result in hiring younger, less-experienced workers who may be more vulnerable to injury or accident. This assumption would make both higher claims frequency and severity numbers unsurprising, especially in higher hazard industries.
What Role Can Insurance Play?
At a major investment level, safety engagement offers one of the most valuable roles tech-enabled insurance can play in the relationship between risk management and a business. It’s no secret that increasing engagement in a safety and compliance program directly and positively influences frequency.
A synergy between a risk-engineering or safety-engagement team and underwriting is the best way to ensure a feedback loop exists between the front line and the top line, eliminating gaps and highlighting opportunities for the client and insurer to work together on risk education or claims scenarios. Some companies offer a dedicated safety coach who works with the client to identify loss drivers and reduce them through education, training, and technology. Combined with a report card-type scoring system, the client is able to gauge their own success over time.
At a minimum investment level, digitization—particularly around OSHA compliance and safety engagement—can also move the needle for businesses in these higher hazard industries. Insurtech has helped many businesses evolve and modernize to more efficient models, which closes gaps in hiring and training and eliminates the challenge of managing certifications.
Brokers are a fantastic resource as businesses seek to evolve toward tech-enabled workers’ compensation carriers in 2023 and beyond. Frequency reduction is possible with the right part. Working together, we can get more workers home safe at the end of every shift.