Extreme heat is causing a rise in workplace injuries and workers’ compensation costs, according to a global insurance brokerage and risk advisory company.
An analysis conducted in early 2023 found that heat-related workers compensation claims in the U.S. “have increased significantly over the last 10 years,” according to Marsh, which used its “casualty big data lake” containing “millions of unique claims … with billions of data points” to conduct the research.
The Southwestern U.S. in particular has seen the incidence of heat-related claims double during this period.
Further, from 2014 to 2016 – during the El Niño event – there was a peak in the number of claims. El Niño conditions cause more heat to release into the atmosphere, causing warmer-than-average years. This peak in claims “highlights the sensitivity of worker well-being to climatic fluctuations.”
Marsh pointed to a 2021 study of U.S. workers’ compensation claims from 2001 to 2018 to corroborate its findings. That study used data from injury claims “from the nation’s largest workers’ compensation system” finding that rising temperatures caused about 20,000 injuries per year. Likewise, a report in the Atlantic Council found that heat-related injuries are causing the U.S. a total economic loss of $100 billion annually.
Climate risk already impacting claims
Extreme heat’s impact on workers must be addressed by employers for a number of reasons, including:
- an absence of dedicated regulations which leaves workers vulnerable to heat-related health risks
- the fact that this upward trajectory of extreme heat and associated injuries are expected to persist, and
- the reality that extreme heat is a leading indicator for other types of workplace claims.
This data points to climate risk already having an impact on employers’ workers’ compensation claims, according to Marsh.
To get control of the situation, Marsh said that employers should:
- review workers’ compensation claims to watch for trends and ensure insurance coverage is aligned to a company’s individual risk profile
- assess exposure and use available tools to forecast increased exposure to build a case for action, and
- work with safety and human resources personnel to implement best practices.