Spike In Workers Comp Claims Post Natural Disaster
Hurricane Sandy could cause a spike in Workers Comp claims? New York, New Jersey, and many other states have felt the impact of Superstorm Sandy. The hidden increase in economic costs will occur when the rebuilding begins. I had coined the term “Hurricane Syndrome” after I saw a spike in the South Carolina Workers Comp claims I was handling after Hurricane Hugo.
I posted on the Learning Curve as being a bellwether for Workers Comp claim spikes when a worker uses a tool or performs some job duty for the first time. This can also be applied to the reconstruction of the northeastern states after Hurricane Sandy.
The Learning Curve will apply to reconstruction after a large storm as many labor-type workers will be doing jobs they may have never performed or have not done for a long time due to the economy.
There should be some type of claims spike over the next six months in at least New York and New Jersey at a minimum. Accidents that would not occur in a normal situation may actually happen when a massive labor force increase occurs in a specific area.
As noted often in this blog, numerous accidents over a given period is much more damaging to the E-Mod (X-Mod in CA) than one or two major accidents. The Loss Development Factor (LDF) may also spike for self-insureds. The rating bureaus have all taken into account that numerous smaller accidents cost more over the long term than one large accident. The statistics of risk usually prove the rating bureaus’ assertions correct.
The Learning Curve has been around since the 1930’s. There has not been one study that contradicted the premise of less experience = more accidents. If one looks at almost any college-level book that covers business analysis, the Learning Curve will be in it.
My next post will cover how carriers/TPA’s/and employers can gear up for the increase in WC claims.
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