Construction workers comp claims rose most among youngest employees, Selective reports

Insuring for workers compensation claims is affecting the construction industry in managing risks, especially as workers comp claims increase in the sector, according to findings in Selective Insurance's 2023 General Contractors Risk Report.

Injuries and claims among residential contracting workers ages 25 to 34 during 2022 were the highest for any nine-year age segment up to age 64, according to the report. Selective based the report on its own internal claims and underwriting data, along with qualitative insights from its operating model, as well as external data. About half of Selective's commercial lines coverage portfolio is construction.

The shortage of skilled labor means that contracting jobs are using less experienced workers whose potential to cause or have accidents is higher, stated Jim Albi, assistant vice president of the contractors strategic business at Selective. "We emphasize that onboarding, training and continuous learning for these new entrants into the workforce is super important, and needs to continue," he said.

Recent reporting on workplace injuries by Travelers, covering a variety of industries, found that the youngest workers had the highest percentage of workers comp claims and the oldest workers (above age 60) had the highest average costs per claim.

The impact of increased workers comp claims in construction and contracting will be felt in two ways, according to Selective's Albi. "Impacts on the insurance end will be more on the way claims are paid. That is an area that a contractor can directly control and help mitigate through insurance and risk transfer management to protect themselves most adequately," he said. 

The second impact is with increased subcontracting due to the labor shortage. "The challenge and the risk there is you're hiring another entity to work on your behalf. You must think of them as though you are at risk for anything they do and bring on the job site," Albi said. "The way to mitigate that is carrying appropriate insurance, managing the job safety and keeping the same standard for your subcontractors as you would for your own employees."

The injury claims among residential contractors track closely with housing starts figures, according to Selective's research. As housing starts dropped from about 1.6 million to about 1.4 million over the course of 2022, residential contracting claims dropped from a peak of 12% of claims in June to about 3% in December. Overall from 2020 to 2022, operations claims from residential contracting numbered about 75% of all claims, with the other 25% coming from non-residential contracting.

Selective counsels that general contractors should use slower times to provide more safety training and reviews.

Contractors have responded to the rise in workers comp claims with Selective reporting that its builders risk policies covering $2.5 million or more jumped 23% over the course of 2022.