By John Novaria
The impact of COVID-19 on workers compensation will come down to several fundamental questions in the coming months: Who’s at work? Who’s going back to work? And under what circumstances?
Experts addressed these questions during a webcast jointly sponsored by Triple-I and the National Council on Compensation Insurance (NCCI). The discussion was moderated by Mark Friedlander, director of corporate communications, Triple-I.
While they agreed it’s too early to know all of the impacts of the virus on workers compensation, several important themes are emerging.
Sean Cooper, practice leader and senior actuary, NCCI, said the economy has experienced sudden job losses, compared to the Great Recession of 2008-09, when they were spread out over a period of time, and the nature of those jobs is much different.
“Back then you saw construction and manufacturing impacted greatly, while this time it’s hospitality, leisure and travel,” he said.
Cooper explained some of the varying impacts of COVID-19 on overall workers compensation claims: while COVID-19 claims will have an upward influence on claims, social distancing could put downward pressure on frequency. He also noted telehealth could put downward pressure on the cost of claims.
NCCI files rates and loss costs for every job classification in 38 states, and submits those to regulators for approval in each state. The organization has taken several actions and made several changes to reflect COVID-19.
“We began collecting payroll for furloughed workers so that payroll wouldn’t be used in premium calculations,” said Jeff Eddinger, senior division executive, NCCI. “We are also tracking legislation in each state that affects compensability presumptions.”
Triple-I chief economist Dr. Steven Weisbart pointed out that the last recession was a lengthy one – lasting 19 months – and this one in contrast is unique because it largely depends on a virus and society’s ability to successfully combat it.
Weisbart said he believes the nation will emerge from this pandemic with a different type of economy.
“Telecommuting will be one of the new norms,” he said. “People are recognizing they can do most jobs at home, and companies don’t have the expense of renting office space.”
Weisbart also thinks there will be some additional conversion to robotics and machine jobs, and the number of jobs performed by people may well shrink. He says these types of changes in the workplace will make some difference over time in the types of jobs available and skills required.
Until now, few would have considered a pandemic a likely workers compensation catastrophe. Eddinger noted that traditional methods for calculating the impacts don’t work for low frequency, high severity events.
“NCCI has engaged a modeling firm to evaluate if a pandemic catastrophe provision would be appropriate for future rate filings,” he said. “After 9/11 we applied terrorism models in all 38 of our states, but that was more straightforward because compensability applied to all workers; if you were at work during an event you were covered.”
Watch the highlights: Webcast Highlights Video
Watch the full webcast: Impact of COVID-19 on Workers Compensation Insurance
- NCCI’s COVID-19 Hypothetical Scenarios Tool
- COVID-19 and Workers Compensation: Modeling Potential Impacts (White Paper)
- COVID-19 and Workers Compensation – Frequently Asked Questions
- COVID-19 Resource Center
- Just the Facts: COVID-19 and Workers Compensation
- FAIR: Future of American Insurance and Reinsurance
- Claims Journal
- Insurance Journal
- Business Insurance