Time to face new realities

Risk & Insurance, Oct 15, 2003 by Peter Rousmaniere

New, compensable conditions enter the workers' compensation system from time to time, yet one millennia old condition is still not adequately accepted: post-traumatic stress disorder, or PTSD.

Until it is, our workers' comp system serves as a doubtful shield against the ravages of PTSD.

How individuals respond to violence has always interested me. A son witnessed the World Trade Center disaster from a rooftop six blocks away. Yet he appears untroubled. For my father, an aide to generals in WWII, glamorous memories have darkened over the decades into regrets.

The events of Sept. 11th were a threshold for workers' comp, in that no insurer could fail to see the validity of mental stress as a compensable condition. Much to their credit, carriers such as the New York State Fund quickly accepted many mental stress claims.

But consider this: Had one plane flown into Peachtree Plaza in Atlanta, the insurers' can-do success could have been a can't-do embarrassment. While New York law recognizes mental stress claims, Georgia law denies them outright.

Terrorists aim to psychologically scar their victims. Not only claims adjusters, but also the vast community of employers and service providers must be prepared.

Our hearts shudder over severe physical injuries and deaths, but the most frequent injuries from a terrorist attack would likely be mental stress.

That poses a real challenge, as workers' comp insurers are often cool to mental health services. How many insurers know how to recruit crisis managers on behalf of their insured, or even how to evaluate care for post traumatic stress?

In 2002, the American Society of Workers' Compensation Professionals (AMCOMP) analyzed the mental stress provisions in state laws and found a thicket of prohibitions, hard-to-fathom distinctions and contradictions.

Upon another major terrorist attack, most insurers will probably improvise how to address any large number of stress claims--whether they appear as such, or dressed up as physical injuries to obtain compensation. No insurer would risk being caught publicly denying stress claims after an atrocity.

The workers' comp and insurance industries sought and won financial guarantees from Congress to lessen the future shock of a huge World Trade Center-type loss.

Does that not obligate the insurers to assume some leadership in preparedness? The average employer will expect its insurer to know what to do in light of this new risk.

A Trade Group's "Cramped Thinking"

The National Council on Compensation Insurance (NCCI) prepared actuarial estimates of terrorist losses and sent them to insurers to tack on top of current premiums. The NCCI did not reveal what its models predicted in types of losses, nor did it advise on how to prepare for them.

The NCCI's rationale for not disclosing the types of losses appears to be that its work is proprietary. That seems rather cramped thinking, with the nation on edge and taxpayer money committed.

From an actuarial view, workers' comp insurance is a cost-plus business, where the costs are considered set by past patterns, pins major trends, plus chance. Analysis begets an orderly forecast of losses that translates into premium estimates. The NCC1 performed this task. But for terrorism risk its work is incomplete. We miss medical and corporate preparedness. The NCCI's approach so far has been suspenders and no pants.

Mental stress from traumatic events is a topic we know a lot about, all too tragically. A Baltimore-based foundation, Sidran, focuses on this risk exclusively. The Vietnam War, some horrendous ferry sinkings in Europe, the Oklahoma City bombings and numerous school shootings have been natural labs to study PTSD and its cures.

This nation is rich in the right resources. Before the next attack, let's use them. Call your insurer or TPA today.

Peter Rousmaniere writes monthly on workers' comp for Risk & Insurance. He can be reached at pfr@rousmanietv.com