A Brief History of Workers’ Compensation Insurance Programs
Workers Compensation in the Ancient World
For almost as long as workers have been injured on the job, we have had some formal or informal system for compensating workers for workplace injuries. Managing and processing workers’ compensation claims is, if not the oldest profession in the world, then at least pretty close! The oldest recorded formally and legally mandated workers’ compensation plan in the world dates back to at least 2050 BC. C., in ancient Sumer, in what is now Iraq. Stone tablets recovered from the city of Ur, some 9 miles from Nasiriyah, established a fixed system of payments to injured workers, itemized by injury.
Hammurabi’s Code later adopted the practice, as did the Greeks, Babylonians, Romans, Arabs, and even the Chinese.
towards the modern age
The Prussians, under Otto von Bismarck, were the first modern nation-states to adopt a formal system of workers’ compensation after the Industrial Revolution, with the Accident Insurance Act of 1884. Originally intended as a measure to prevent movements Marxist politicians made inroads into the Prussian/German working classes, the Bismarck program actually contained two important innovations that are at the heart of the American workers’ compensation system today: First, the claims were separated from the wrong system, so that the Workers seeking relief under the workers’ compensation rule could not sue their employers for damages in court. Second, the claims were processed under an earlier version of the current “no-fault” provisions. Claims could be paid promptly, because there was no need for a magistrate to assign fault or blame through a detailed investigation of the facts.
The system worked so well and was so popular that the largely German-American population of Wisconsin, in 1911, enacted the first workers’ compensation insurance program in the United States, modeled on the Prussian system.
Development in the USA
Although the US was a few years behind the UK in adopting workers’ compensation plans, a very limited program was created for workers who were directly involved in projects related to interstate commerce, such as railroad workers, established in 1908. It was limited to only this population because the sentiment at the time was that programs like workers’ compensation for everyone else were properly left to the states.
At the grassroots level, however, there was growing public awareness of the dangers of employment in the industrial age thanks to populist gossip writers like Upton Sinclair, who highlighted the plight of slaughterhouse workers in his novel, The Jungle. This awareness of the dangers of modern industrial employment in unforgiving factories and plants led to a series of unsuccessful attempts to pass legislation in the state assemblies, early on, first in New York (1898), then in Maryland (1902), Massachusetts (1908) and Montana (1909).
The big change”
Ultimately, the first state to successfully enact comprehensive workers’ compensation was the largely German-American population of Wisconsin, then the heart of the American progressive movement. His program was modeled on the Prussian system, though only after a lengthy debate between business and labor interests. In the end, they arrived at the same “big payoff,” in the jargon of the day, that was at the heart of the Bismarckian model: Employers agreed to provide substantial wage replacement for injured workers through a no-fault insurance system. some. -find a requirement that would cause devastating payment delays to workers who depended on their wages to survive. In exchange, the labor interests agreed to give up the right to sue their employers for covered claims. This allowed employers to alleviate the risk of outsized claims and judgments.
Once Wisconsin broke the seal, however, other states quickly followed suit: 11 more states approved their own plans that year, four more in 1912, and eight more in 1913. By 1935, some 45 of the 48 states in that By that time they had passed their own workers’ compensation laws, and By 1948, a similar program had been established in the then-existing 48 states, as well as the future states of Alaska and Hawaii.
Today, all 50 states have enacted similar legislation, including these provisions:
• A no-fault approach to claims processing: workers do not have to prove their employer was negligent in order for benefits to be paid.
• Employers are protected from lawsuits (an erroneous exemption) for workers’ compensation issues.
• Employers fund workers’ compensation benefits through premium payments, which vary depending on the status and occupation of the covered worker.
Additionally, 45 of the 50 states delegate responsibility for claims administration to special boards. Five states — Wyoming, Tennessee, New Mexico, Alabama, and Louisiana — keep the process within the judiciary, although in each case there is a state agency to help with administration and quick disbursement of funds for injured workers.