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Unraveling the Impact of Climate Change on Workers’ Compensation

16 Jul, 2023 Claire Muselman

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Phoenix, AZ - Earlier this year, the Workers' Compensation Research Institute (WCRI) hosted a seminal conference that provided a platform for an enlightening discussion on an increasingly intricate issue: the intersection of climate change and workers' compensation. Jill Leonard spearheaded the conversation from the Louisiana Workers' Compensation Corporation and Jeff Rush from the California Joint Powers Insurance Authority. They explored the multifaceted impacts of climate change-induced disruptions on a broad spectrum of stakeholders in the workers' compensation ecosystem - employers, employees, injured workers, and compensation insurance providers.

Understanding Climate Disruptions: The Employer and Employee Experience

In today's world, grappling with climate change has become a challenging norm. One of the most tangible disruptions experienced in workplaces is the widespread impairment of essential utilities. Power outages that can extend for weeks, water advisories, and road closures due to extreme weather events are no longer considered exceptional. These climate change repercussions directly affect the normal functioning of workplaces, disrupting routine operations and impeding both employer and employee productivity.

For the workforce, the impacts of climate-related disruptions extend far beyond the workplace's confines. Employees have to grapple with personal crises emanating from these climatic events. Damage to personal property, loss of transportation due to infrastructure impairment, and limited access to essential supplies such as fuel have become all too common. These external pressures can significantly affect employees' mental and physical health, leading to further disruptions to businesses and organizations.

The Uphill Journey for Injured Workers Amidst Climate Crises

In the aftermath of climate-related disasters, the path to recovery for injured workers becomes significantly steeper. With many healthcare facilities shutting their doors due to these extreme events, accessing medical care becomes a formidable challenge. This obstacle is compounded as injured workers may need to relocate, facing difficulties finding replacement healthcare professionals or filling their prescriptions in unfamiliar locations.

In addition to these healthcare-related challenges, injured workers are vulnerable to additional threats to their homes and properties due to climate change-driven catastrophes. Their limited physical capacity may hinder their ability to protect their properties or implement effective damage mitigation strategies adequately.

Furthermore, accessing indemnity benefits becomes a complex process for injured workers during climate-induced disruptions. Essential services like mail delivery and banking often face significant delays or closures after such events, leading to lengthy delays in benefit payments. Communication with claims representatives, a crucial lifeline for many injured workers, can also be affected under these challenging circumstances.

Adapting to Climate Crisis: The Insurance Providers' Perspective

The ripple effects of climate change also extend to workers' compensation insurance providers. These institutions often face considerable operational upheaval due to the sudden onset of climate-related crises. In light of these emergencies, providers may need to suspend cancellations to continue providing services to their clients.

The increasing frequency and severity of climate change events might stimulate the entry of new employers into the market. This development can strain the underwriting and loss control staff, who find themselves navigating an increased workload and the complexities of understanding these new businesses.

Insurance providers also face the challenge of accurately assessing the scope of work and associated payroll amidst uncertainty and change. The difficulty in assessment could lead to potential audit issues and challenges in revenue collection, adding to the strain on these organizations. Moreover, these turbulent times provide a fertile ground for unscrupulous businesses looking to exploit the situation, presenting another challenge for insurance providers to tackle.

Over the past few years, the insurance industry has been rocked by the insolvency of several well-known providers, including Bedivere Insurance Company, American Capital Assurance Corporation, Gulfstream P&C Insurance Company, Highlands Insurance Company, State National Fire Insurance Company, and Access Home Insurance Company. These unfortunate occurrences underline the extent and severity of climate change's impact on the industry.

Proactive Measures and Learnings from the Devastating 2020 California Complex Fires

The catastrophic Complex Fires in California in 2020 provided a grim illustration of climate change's devastating impact on workers' compensation. These fires highlighted the wide spectrum of hazards that workers could face in these situations, including heat-related illnesses, injuries from lifting heavy objects, slips, trips, falls, exposure to hazardous levels of carbon monoxide, unstable structures, fire hazards, and even worker fatigue.

In response to these growing concerns, California has taken a proactive approach by implementing significant measures to protect its workforce. A notable effort is the enactment of Assembly Bill 1643 (Rivas). This progressive legislation mandates the Secretary of Labor and the Workforce Development Agency to establish an advisory committee to scrutinize the impact of heat on California's workers, businesses, and the broader economy.

The bill aims to enhance data collection methodologies regarding worker injuries, lost wages due to heat, and frequency of occupational injuries and illnesses under varying temperature and humidity conditions. This effort is vital to shed light on the underreporting of heat illnesses, especially among low-income employees.

Key Questions for Employers Amidst the Climate Crisis

As climate change continues to reshape the working landscape, employers face critical questions: What are our legal obligations to protect our workforce? What loss control techniques can we implement to mitigate these new risks?

To navigate these complexities, employers must assess their exposure in terms of where their employees are located and the number of workers at each site. They must also identify potential environmental hazards their employees may face and develop comprehensive strategies to mitigate them.

The intersection of climate change and workers' compensation presents significant and complex challenges. As we grapple with the ever-changing circumstances, understanding these effects and adapting proactively is increasingly crucial. It is about protecting the most vulnerable workers and maintaining economic stability and resilience in these testing times.

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    About The Author

    • Claire Muselman

      Meet Dr. Claire C. Muselman, the Chief Operating Officer at WorkersCompensation.com, where she blends her vast academic insight and professional innovation with a uniquely positive energy. As the President of DCM, Dr. Muselman is renowned for her dynamic approach that reshapes and energizes the workers' compensation industry. Dr. Muselman's academic credentials are as remarkable as her professional achievements. Holding a Doctor of Education in Organizational Leadership from Grand Canyon University, she specializes in employee engagement, human behavior, and the science of leadership. Her diverse background in educational leadership, public policy, political science, and dance epitomizes a multifaceted approach to leadership and learning. At Drake University, Dr. Muselman excels as an Assistant Professor of Practice and Co-Director of the Master of Science in Leadership Program. Her passion for teaching and commitment to innovative pedagogy demonstrate her dedication to cultivating future leaders in management, leadership, and business strategy. In the industry, Dr. Muselman actively contributes as an Ambassador for the Alliance of Women in Workers’ Compensation and plays key roles in organizations such as Kids Chance of Iowa, WorkCompBlitz, and the Claims and Litigation Management Alliance, underscoring her leadership and advocacy in workers’ compensation. A highly sought-after speaker, Dr. Muselman inspires professionals with her engaging talks on leadership, self-development, and risk management. Her philosophy of empathetic and emotionally intelligent leadership is at the heart of her message, encouraging innovation and progressive change in the industry. "Empowerment is key to progress. By nurturing today's professionals with empathy and intelligence, we're crafting tomorrow's leaders." - Dr. Claire C. Muselman

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