Introduction: Separating Industry Rhetoric from Reality
Recent claims promoted by insurance companies and special interest groups have focused heavily on isolated instances of alleged fraudulent construction injury claims to advocate weakening or eliminating New York’s critical Scaffold Law (Labor Law §§240/241). These groups argue that such claims significantly inflate insurance costs and ultimately burden property owners, renters, and consumers. However, closer scrutiny reveals that their assertions rely largely on anecdotal outliers, rather than comprehensive data or genuine industry trends. In reality, the Scaffold Law has consistently played a crucial role in promoting workplace safety and ensuring fair compensation for legitimately injured workers.
This post will examine each claim presented by the insurance lobby and counter them with empirical evidence, independent analysis, and legal facts that underscore the true effectiveness and fairness of the Scaffold Law.
Claim 1: "Widespread Fraudulent Falls" Are Inflating Costs
Insurance Industry Claim:
Insurance lobbyists frequently assert that construction workers regularly stage fake falls to secure undeserved compensation, driving up costs for contractors, insurers, and ultimately, homeowners and consumers. They highlight isolated cases of fraudulent claims as evidence of widespread abuse.
Rebuttal:
Fraudulent claims are exceptionally rare, and representing them as typical is deeply misleading. According to extensive studies and industry research, the actual rate of fraudulent workers’ compensation claims nationwide consistently falls between 1–2%. One comprehensive analysis revealed that confirmed fraud occurs at a rate of just 17 out of every 100,000 claims—far below industry assertions of widespread misconduct. Thus, over 98% of all injury claims filed are entirely legitimate.
Falls from heights constitute one of the most frequent and deadly workplace incidents in construction. In fact, according to the Center for Construction Research and Training, more than 35% of construction fatalities are due to falls, making them the leading cause of death in the industry. Given these stark statistics, the notion that construction workers routinely stage falls is not only implausible but borders on the absurd. Workers in this inherently dangerous field face very real risks daily; thus, injury claims overwhelmingly represent legitimate and severe accidents requiring genuine remedies, not manufactured events.
By highlighting rare fraudulent cases and ignoring legitimate claims, the insurance industry unfairly stigmatizes injured workers, potentially deterring them from coming forward and seeking rightful compensation. The responsible response to fraud is targeted investigation and prosecution, not a wholesale dismantling of worker protections.
Claim: The Scaffold Law Incentivizes Fraud and Inflates Insurance Premiums
Insurance Industry Claim:
Insurance lobbyists argue that New York’s Scaffold Law—which imposes strict liability on employers and contractors when safety violations cause a worker’s injury—invites fraudulent claims. They assert that because contractors and owners can be held fully liable, workers are supposedly encouraged to fabricate or exaggerate accidents, thus inflating insurance premiums. They often frame the law as uniquely burdensome compared to other states, linking New York’s relatively high construction insurance rates directly to Scaffold Law claims.
Rebuttal:
This argument fundamentally misrepresents how the Scaffold Law operates and confuses correlation with causation. New York’s Scaffold Law holds contractors and property owners responsible for providing essential safety equipment and for ensuring safe working conditions when workers operate at heights. Importantly, liability only applies if an owner or contractor’s failure to provide legally required safety equipment directly leads to the worker's injury. If safety measures are properly provided and the worker’s injury results solely from their own actions, liability does not attach to the contractor or owner, as explicitly stated in landmark cases such as Blake v. Neighborhood Housing Services of New York City (2003).
Moreover, the narrative that the Scaffold Law directly causes inflated insurance premiums ignores broader industry realities. New York's high insurance rates exist even in areas where the Scaffold Law does not apply, such as roadway paving and certain infrastructure work. If Scaffold Law claims alone drove these costs, premiums should be significantly lower for these unrelated categories—but they are not. Data from the Insurance Services Office (ISO) shows that carpentry-related insurance rates in New York, much of which involves elevation work covered by the Scaffold Law, are actually lower than comparable rates in Connecticut, a state without similar strict liability protections.
This strongly suggests that market forces, insurer profit margins, underwriting practices, and general construction cost inflation play far more substantial roles in driving insurance premium increases than Scaffold Law-related litigation.
Lack of Transparency: The Insurance Industry’s Resistance to Revealing Actual Data
Perhaps the most telling indicator of the insurance industry’s lack of credibility on this issue is its longstanding resistance to transparency initiatives aimed at verifying claims. Industry groups have consistently fought legislative efforts such as the Construction Insurance Transparency Act, which would require insurers to publicly disclose detailed data about premium collections, claim payouts, and how Scaffold Law cases specifically affect their bottom line.
Lawmakers and advocates have repeatedly pushed for this transparency, arguing that insurance companies’ refusal to open their books casts significant doubt on their claims about cost impacts. Consumer and labor groups point out that without verifiable data, the industry’s assertions about rampant fraud and rising costs remain purely speculative, conclusory, and self-serving. If insurers were confident in their allegations, they should have no objection to disclosing their claims data. Their ongoing resistance raises legitimate questions about whether Scaffold Law litigation truly drives the premium increases or whether insurers exploit this narrative to justify higher rates and protect profits.
Legislation such as New York’s proposed Construction Insurance Transparency Act seeks to force insurers to provide this crucial data, yet the industry has consistently opposed it. This resistance undermines their credibility and reinforces suspicion that their attacks on the Scaffold Law are financially motivated rather than fact-based.
Alternative Factors Driving Insurance Costs
Beyond transparency, several alternative explanations provide a more accurate picture of why construction insurance costs have increased in New York and across the country:
Market Cycles: Insurance markets routinely experience “hard cycles,” periods of elevated premiums caused by macroeconomic factors, reduced investment income, and risk reassessment. These cycles affect rates across multiple industries, not just construction.
Profit Margins and Competition: The insurance industry’s underwriting decisions and pricing strategies significantly impact premium costs. For example, during periods of market consolidation or reduced competition, insurers often raise premiums broadly to maximize profits.
Project Delays and Expanded Scope: Large-scale construction projects experiencing delays, scope creep, or complex contracts can drive insurance costs higher due to prolonged coverage periods—not necessarily increased injury claims.
Construction Industry Growth: New York’s construction sector has grown significantly, especially in high-risk projects involving elevated work. The increased number and scale of these projects naturally lead to higher total premiums, independent of the Scaffold Law.
The Scaffold Law’s Proven Track Record of Enhancing Safety
Empirical evidence shows that the Scaffold Law has successfully made construction sites safer in New York by creating strong incentives for contractors and owners to prioritize safety:
Illinois as a Warning: When Illinois repealed a similar law (the Structural Work Act) in 1995, the state saw an immediate and significant increase in construction fatalities and scaffold-related injuries, with the rate of scaffold-related falls tripling within a decade after repeal. The repeal directly led to reduced safety compliance, increased accidents, and ultimately greater financial and human costs.
New York’s Superior Safety Record: Despite its large construction industry, New York maintains one of the lowest construction fatality rates nationwide. Labor and safety groups attribute this directly to the Scaffold Law, which ensures rigorous compliance with safety regulations and proper equipment provision.
Protection for Vulnerable Workers: Data consistently shows that immigrant, minority, and non-union workers disproportionately face workplace hazards. The Scaffold Law provides these vulnerable workers with an essential layer of protection, ensuring employers cannot evade responsibility by shifting blame onto less powerful employees.
Conclusion: Protect Worker Safety, Demand Industry Transparency
The insurance industry’s claims of widespread fraud and skyrocketing insurance costs due to the Scaffold Law are unsubstantiated and misleading. Without transparent data, these claims remain speculative and seem driven more by insurer profit motives than by genuine concern for controlling costs or promoting fairness.
The Scaffold Law is a critical safety net for construction workers who face very real dangers every day. The correct approach to isolated instances of fraud is targeted enforcement and prosecution, not stripping protections from all construction workers. Maintaining New York’s Scaffold Law is the best strategy for ensuring workplace safety, reducing injuries, and fairly compensating injured workers.
Rather than dismantling this critical protection based on industry-generated myths, policymakers should demand genuine transparency from insurers and address insurance premium increases through a holistic understanding of market dynamics and profit motives. Maintaining strong accountability for construction site safety remains essential—and New York’s Scaffold Law continues to play a crucial and effective role in achieving this vital goal.
