Estimating future liabilities for even the most basic line of business involves in-depth analysis of data, expert knowledge of modeling, and professional application of assumptions. Black lung liabilities take reserving to an entirely different level.
Black lung compensation is rooted in a complex regulatory and legislative history.
The disease itself—pneumoconiosis—involves sophisticated and often conflicting medical and scientific evidence and opinions. Against a backdrop of social and political turbulence is a labyrinth of complex if not incomprehensible data. These unusual liabilities require actuarial and case reserving models that are truly unique, applying methodologies not used in any other line of business.
In this article, Milliman’s Christine Fleming and Travis Grulkowski discuss legislative and regulatory complications regarding black lung disease, including the highly complex, non-standard actuarial approaches for evaluating and estimating black lung liabilities.
A recent Centers for Disease Control and Prevention (CDC) report indicates that the rate of black lung disease is going up. Black lung disease is also known as coal workers’ pneumoconiosis, and it’s brought on from inhaling coal dust and working in a coal mine. According to the CDC, black lung cases in miners are the highest they’ve been since recordkeeping began in the early 1970s.
In this episode of Critical Point, Milliman’s Christine Fleming and Travis Grulkowski discuss what these statistics mean for companies and insurers looking to manage this risk for their employees.
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Latent occupational diseases began to emerge in the 1970s as complex risks that could result in future, unknown costs. While asbestos comes to most people’s minds, asbestos claims have generally been handled in tort outside the workers’ compensation systems. Compensation for exposure to coal dust (black lung) generally predated asbestosis and has been handled under workers’ compensation since 1973, under both state workers’ compensation systems and the Federal Coal Mine Health and Safety Act of 1969. So what other latent occupational diseases are potentially of interest to workers’ compensation insurers?
Agent Orange coverage and benefits are still being shaped and molded today. Claims started coming to the Department of Veterans Affairs shortly after the Vietnam War, but were mostly denied until the 1990s when a list of presumptive diseases was created, making it easier for veterans to receive benefits. Similar to black lung, the rules guiding who receives benefits have been changing over time. Under the Agent Orange Act, the Department of Veterans Affairs has expanded the list of “presumptive” conditions. However, the area where less progress has been made is deciding who is covered. Just last year coverage was expanded from “boots on the ground” soldiers to include Air Force personnel who served on the aircraft used to spray Agent Orange. “Blue Water” veterans of the Navy are still fighting to get coverage today.
The effects of black lung and Agent Orange exposure have a potentially obvious link back to their source; however, other occupational hazards are harder to track. The link between coffee roasting and lung cancer is being investigated, with diacetyl exposure being the possible connection. A lack of accurate occupational information in the workplace-illness records or death certificates makes the connection harder to identify. The debate is likely to rage on, even as the number of small, artisanal coffee shops—not to mention the number of potentially exposed employees—continues to grow.
Every beer drinker in America knows about the recent growth in the craft brewery business. Like a genie popping out of a bottle, a new tap seems to show up in your local watering hole every week. Similar to coffee roasting, the milling part of the beer brewing process releases dust into the air. This dust poses two problems; it’s potentially combustible and it can be irritating to the respiratory system. Air handling at breweries is very important and proper dust management guidelines are in place, but it is not clear how effectively these guidelines are followed or the number of people working in the industry. The exposure may continue to grow and, as with coffee roasters, should be tracked.
Readying itself for the potential cascade of occupational hazard claims on the horizon is in the best interest of the insurance industry. One way to do this is to push for improvement in occupational definitions, especially in medical records accompanying workers’ compensation claims. Developing a sterling database to help identify the connections between occupational exposure and conditions would also be helpful. In the end, no insurer wants to see their centennial celebration at the local Knights of Columbus ruined by a magnum cluster of latent injury claims.