We’ve been observing significant differentiation in renewal experiences based on client industry, key risk exposures, and loss history. While the market is soft-to-neutral for accounts with clean loss experience and mainstream risks, carriers have become more cautious on accounts with negative history or higher-hazard exposures. In particular, the market is becoming challenging for accounts with truck or auto fleets or hazardous property risks, and certain carriers are pulling back on environmental / pollution exposure.
These market challenges are partly offset by a favorable Workers’ Compensation market. Driven primarily by reserve releases from prior years, Workers’ Compensation has been a profitable line for carriers. In many cases, this has led to favorable renewals for clients with strong risk management procedures and reasonable claims history.
On the employee benefits side of our business, many employers are looking to differentiate themselves in the market for talent by implementing new benefits programs or adding additional products to their current offerings. We’ve had discussions with a number of employers about enhancing their employer-sponsored health benefits in order to help with recruitment; additionally, many employers are evaluating newer types of benefits (e.g., student loan contributions, flexible spending accounts) to appeal to in-demand workers.
Marijuana Legislation – Risk Management Implications
As cannabis products are becoming legal in more jurisdictions across the United States, many businesses are evaluating the potential impact on their workplaces, safety procedures, and employment practices. Most recently, Illinois became the latest state to legalize marijuana for recreational use and to regulate commercial sales.
From a risk management standpoint, these legislative developments present challenges and a long list of open questions.
- Workplace Impairment: Legal cannabis may result in more employees showing up to work under the influence of marijuana, increasing the risk of workplace injuries. Particularly given the challenges of proving impairment after an accident or testing for impairment on the spot, the risk of increased Workers’ Compensation claim frequency is a cause for potential concern.
- DWI: There is early-stage evidence that marijuana legalization contributes to higher accident rates. In the years since they first permitted recreational cannabis, both Colorado and Washington experienced a larger increase in auto accidents than the broader United States. If this pattern is repeated in other states, we would expect to see an increase in Workers’ Compensation claims related to auto accidents and also further deterioration in the Commercial Auto insurance market.
- Employment Practices: While many states that have permitted marijuana use have also explicitly allowed employers to maintain drug-free workplace policies, we expect employers to face increased scrutiny over employment decisions that are related to either drug use or cannabis-related criminal records. Medical cannabis adds additional complexity, as an employee who is prescribed medical marijuana may be entitled to certain protections regarding the use of the drug.
Additional Considerations and Questions:
- Opioid Replacement: Opioid addiction is a serious issue for both injured employees and their employers. When used to treat chronic pain, medical cannabis may be used as an alternative therapy that can reduce dependency on opioids. This could potentially expedite recoveries, reduce lost time, and reduce overall addiction rates.
- “Zero Tolerance” Policies: In general, employers may continue to ban cannabis use while employees are on the job. Additionally, federal contractors and other employers who are subject to the federal Drug Free Workplace Act must continue to exercise zero-tolerance policies with respect to marijuana and other drugs. Employers who are not subject to this act can generally still impose zero-tolerance policies for “safety sensitive” positions, including drivers or operators of heavy machinery.
- Medical Marijuana and Disability Discrimination: Courts in different states have issued different findings about whether medical marijuana patients are entitled to protections under anti-discrimination statutes. In certain cases, courts have found that employers cannot take action against an employee due to a positive test for marijuana if that employee is using the drug under the supervision of a doctor. Further, under some state statutes, an employer may be required to make reasonable accommodation for an employee to use medically prescribed marijuana.
- Intoxication Testing: As of now, there is no reliable test for determining whether a person is under the influence of THC at a particular time. Toxicology screens only identify the presence of THC in a person’s system, but a positive test could arise from use within the weeks leading up to the test. Because there is no Breathalyzer-style test for intoxication, it will be challenging for employers to identify on-the-job use and to challenges Workers’ Compensation claims that may arise from impairment-driven accidents.
Illinois Update – SB 1596
Illinois recently enacted SB 1596, which gives certain employees the right to sue their employers if they are diagnosed with a latent disease related to asbestos or radiation and their right to file a Workers’ Compensation claim has expired because of the 25-year statute of limitations. Many commentators are concerned about how insurance coverage will work in any potential suits that arise from this legislation, since they will fall outside of the existing Workers’ Compensation system. While we believe these claims are likely covered under Employers’ Liability coverage parts, we are working with our carrier partners to determine the potential impact of this change. If you are concerned about your current or former employees’ historical exposure to asbestos or radiation and the risk of latent injury suits, please reach out to the RBN team and we’ll be happy to consult with you.