COVID-19 Impact on Workers’ Comp Less Detrimental Than Expected

 

 

COVID-19 claims represented only about 2% of all workers’ comp claims paid out by one insurance company by the end of the year.

 

 

  

Most employers around the country (93 percent) who participated in a March 2020 survey by the law firm Litler Mendelsohn Ltd., said that they are concerned about ensuring that workplace conditions and policies comply with applicable safety and health regulations.

“The vast majority are taking practical steps to keep their employees safe, including communicating on hygiene practices and prevention measures (98 percent) and deep cleaning workplaces (62 percent),” according to the report.

Even as the Trump administration was just starting to recommend stricter social distancing measures and states were beginning to institute stay-at-home orders, respondents were already restricting travel (83 percent), canceling meetings (78 percent), imposing quarantines for potentially affected employees (62 percent) and encouraging remote work (59 percent) — and many others were at least considering taking these actions.

Job Loss and Recession

Indeed, there has been tremendous concern about the effects of COVID-19 on workers and these precautions have undoubtedly helped mitigate infections. But the principal impact of COVID-19 on workers has been job loss and the recession, especially in hospitality, retail, and travel services, as well as education and healthcare.

The US Census Household Pulse Survey for Dec 9–Dec 21 has estimated that 50% of the US adult population experienced loss of household employment income (regarding either themselves or a household member) since March 13, 2020. 

Workers’ Compensation Claims

There was initial concern that workers’ compensation claims resulting from the pandemic could be significant. Even though the pandemic has contributed to more than 500,000 deaths in the US, “the workers’ compensation system has not been overwhelmed by claims to date,” according to Bill Donnell, president and chief executive officer of the National Council on Compensation Insurance (NCCI), which prepares insurance rate and loss cost recommendations for most of the workers’ compensation industry. 

In California, for example, about one in six workers’ comp claims was attributed to COVID-19 in 2020, but just a small proportion of those claims required significant medical treatment or hospitalization, according to Alex Swedlow, president of Oakland, California-based California Workers’ Compensation Institute (CWCI).

“At the beginning of the pandemic, the hypothetical scenarios and projections related to direct cost impact were quite grim,” wrote Kim Haugaard, senior vice president of policyholder services at Austin-based Texas Mutual Insurance Co., in an email to Business Insurance. “The current impact has not been as bad as we anticipated that it could have been.”

COVID-19 claims represented only about 2% of all workers’ comp claims paid out by Texas Mutual by the end of the year, Mr. Haugaard said.

Total Claims Offset by Fewer Non-Covid Claims

According to data collection by the National Association of Insurance Commissioners from states throughout the country, total incurred losses through third quarter 2020 have dropped approximately 7.5% compared with the same period in 2019. While this is early data and more people will likely suffer work-related COVID-19 illnesses, insurance companies have generally suggested that during 2020, decreases in non-COVID-19 losses have more than offset increases directly attributable to the pandemic.

“For example,” notes Donnell, “significantly reduced mileage has resulted in fewer work-related motor vehicle accidents and more remote work has limited the incidence of typical workplace slips and falls.”

While workers with COVID-19 have generated some claim activity, so far these losses are predominantly lost time from work. Medical can range from testing costs to intensive care hospital costs. According to a recent NCCI analysis of medical payments in the first half of 2020, the top 5% of the COVID-19 medical claims are driving approximately 70% of the medical COVID-19 related payments.

“This early data validates that serious claims exist, but they are few relative to the total. Among other issues, we are closely monitoring the impact of co-morbidities and are considering the possibility of long-term COVID-19-related health concerns. So, we still have a long way to go to fully understand the claims story from this pandemic,” said Donnell.

For more information or help, contact the Insurance professionals of the PCOC Insurance Program. Call us at: 877.860.7378.

Paul Lindsay
Senior Vice President, Principal, Programs
EPIC Program Solutions
10877 White Rock Rd. Suite 300 Rancho Cordova, Ca 95670
paul.lindsay@epicbrokers.com
916.576.1545 direct  |  877.222.0000 |  916.952.1609 cell
epicbrokers.com  | ca license 0B29370