What impact can wearable devices make on workers’ comp?

Big data and artificial intelligence are the backbones of insurtechs. These technologies help improve insurance products, innovate the sector and drive more efficient companies. Now, they’re helping to improve workplace safety as well. For frontline workers in the industrial workforce, the Internet of Things and wearable technology are being incorporated into workers’ compensation policies that help prevent claims from happening in the first place.

The industrial workforce faces a variety of safety hazards, including ergonomic, organizational and environmental risks. Bad biomechanics caused by high-risk postures performed on the job remains one of the most prevalent threats, resulting in stress on employees’ musculoskeletal systems that, over time, can develop into Musculoskeletal Disorders (MSDs).

MSDs are the most frequent and costly type of workplace injury. Nearly 2 million U.S. workers suffer from MSDs every year, and they’re responsible for almost 30% of all workers' compensation costs. Annually, employers spend as much as $20 billion a year on direct costs for MSD-related workers’ compensation. Employers who don’t address poor ergonomics fail to protect their employees, and their bottom line, from this truly damaging threat.

Companies that deploy wearables to promote better employee ergonomics are getting ahead of the curve. They see that the consequences of detecting a potential problem, instead of waiting for an accident to happen, are huge. Fewer injuries mean big savings in both lost worker hours, as well as expensive insurance claims and premiums, alongside the benefits of improved employee morale and productivity.

Reduced injuries and claims
Perhaps the biggest impact of a wearable technology system is that it institutes a culture of continuous improvement.

Since the beginning of the COVID-19 pandemic, warehouse and delivery workers have been under increasing pressure to move more products faster. While workers do the best they can, they do get injured. Often the strain of physical labor results in back injuries. To avoid injury, workers need to use body mechanics in the right way.

Wearables that monitor industrial workers’ posture throughout the day can detect whether the worker is bending or twisting improperly, or if they are over-reaching. When a worker bends incorrectly, he or she gets an alert, which reminds them that this is a posture that puts them at risk for injury. Over time, the workers start to self-correct.

For instance, at Iron Mountain, a storage and information management services company, wearables function as an always-on, continuous coaching system. Employees use a belt-mounted wearable sensor that automatically recognizes risky postures and alerts users with a light vibration. These real-time alerts create new habits and drive sustained behavior change.

When high-risk postures are reduced, injury rates go down too. Data from a specific 1,000-unit deployment on drivers and warehouse workers found that for about 30% reduction in HRPs, there was a corresponding about 50% reduction in injury rates 12 months later.

At Iron Mountain, one employee was performing 389 high-risk postures per day. Over 10 years, that would result in nearly one million high-risk postures. With a wearable device, the employee reduced their number to 38 per day - a 90% reduction. Overall, in the first year of testing a wearable system, the company realized a 64% reduction in injuries and a 58% reduction in the cost of worker’s compensation claims.

As organizations reduce injuries among their workforce, they also reduce workers’ comp claims and can even improve their experience modification rating, resulting in premium savings.

Enhanced data insights
For management, a wearable system provides a wider perspective on the workplace by pinpointing potential environmental hazards. System data becomes a valuable diagnostic tool that helps them to determine which jobs are the most difficult, which are less physically taxing and which should be automated. The data also can be used to determine whether to invest in retraining employees or redesigning the work environment.

Management can review all the system data on a web-based dashboard. This might include how many high-risk employees they have and whether or not their risk rates are going down over time. They also might see which jobs are generating the highest number of injuries. This, in turn, helps them to understand where their greatest risk is and how to address that risk via workplace interventions.

Deploying a wearable system
For a successful wearable system deployment, it's also important to let workers know what the wearable system will not be doing. It’s not a Big Brother. There are no GPS or cameras. It’s purely a safety device. When viewed as a change management tool, the wearable system becomes part of the organization’s overall safety strategy. The organization should commit to supporting the systems and make sure employees are picking them up and returning them at the end of day.

Wearables are another form of personal protective equipment, just like the hard hat, safety badge and work gloves that employees put on every day. People are motivated to use it when they begin to see improvement in how they feel and when they begin to see fewer of their co-workers out and injured. Once wearables become an integral part of the organization’s culture, safety is driven by leading, not lagging, indicators.

Risk prevention
Smart technology promises to continue enhancing the insurance experience for carriers, producers and policyholders alike. Advances in technology and new data streams are making new products and risk prevention services available. This tech-driven innovation shifts what was once a reactive system of workers’ comp claims management to a proactive approach that aims to prevent claims before they even occur.