Marsh Reports COVID’s Impact on Workers’ Comp Is Less Than Anticipated, But There Are Still Risks to Be Wary Of
When the COVID-19 outbreak first reached global pandemic status, the National Council on Compensation Insurance (NCCI) predicted that the total potential range of impacts for workers’ compensation could land somewhere between $2.7 billion and $81.5 billion.
However, the worst scenario has (not yet) come to pass.
Marsh’s new market study, titled “COVID-19’s Impact on Workers’ Compensation Market Is Minimal, But Challenges Persist,” explores the impact of the coronavirus six months later, and as the title suggests, the predictions seem to have been overblown.
A Look at Today’s Results
“A lot of factors went into making assumptions around what’s compensable, how many people would get COVID, and how severe their injuries would be,” said Christine Williams, managing director of the Workers’ Compensation Center of Excellence and study co-author.
“But the claims so far have been fewer and very small. It just hasn’t materialized in the way it was expected to.”
Even despite an influx of new regulation or directives in 20 states — and counting — that expand compensability of COVID-19 claims, total claims frequency has generally been lower in 2020 than for the same period in 2019. This has been true for most industries with the exception of health care.
“The presumption was that there would be many more claims related to COVID-19, which we have not seen, with the exception of California,” said study co-author Dennis Tierney, director of workers’ compensation claims at Marsh.
The study projects that new injury claims across the board could fall by 20% in 2020 as a result of the bigger economic picture that has led to higher unemployment and wider furloughs. In addition, there might be more reluctance among workers to file claims in an exceedingly difficult job market.
Are There More Home Office Injuries?
Perhaps the most surprising finding was that despite the mass trend toward remote work, there have been few claims related to the home workplace.
“That’s surprising, given how few companies had formal telecommuting agreements in place to have workstations set up in a certain way,” Williams said.
“With the pandemic, one day we went to work and the next day we didn’t go back for months. You had all of these companies asking people to work from home without preparation. We would have expected more of an uptick there.”
The Cost of a COVID Claim
Filed COVID-19 claims have been far less expensive than predicted as well. The majority have cost less than $3,500 each.
On the other hand, 4% of reported claims cost employers much greater sums, particularly when patients required extended stays or ICU stays. One of the big unknowns is how the long-term complications of “long haulers” might impact the claims and claim costs over the coming months and years.
“It’s a big question mark in general,” Tierney said.
“No one knows the lasting effects of COVID-19 and what its health implications can be down the line. Someone who has it and who returns to work and sustains heart or lung damage along the way might relate that condition to work. There’s also the stress, or post-traumatic stress around the virus. These are things we need to monitor but [whose impact is] difficult to project.”
Another unknown is how many more states will add regulation in the coming year.
“I would have thought this far into it we would see most of it in place, but we continue to see more laws pop up,” Williams said.
What the Future Holds
The marketplace continues to stay competitive, the study finds, despite the economic fallout of the pandemic. Indeed, buyers continued to renew workers’ compensation insurance in the first half of 2020 with rate changes between -5% and +3%.
As the pandemic continues to ramp up into the cold months of fall and winter, Marsh advises that employers put workers’ health and safety first, following CDC guidelines to prevent exposure and transmission, transitioning to safe reopening or continuing to promote remote work arrangements where possible.
Equally important is to foster an open conversation about the claims process, particularly for those workers who are coming forward with claims for the first time.
“Even before the pandemic hit, the industry was shifting toward this claims advocacy model, focusing on communication, education and transparency,” Tierney said.
“With the pandemic, this has become more important than ever before. Not only are more people getting injured for the first time, but the pandemic creates more worries on top of that—people worry about losing their job, about the wellbeing of others around them. As an employer you can show you care by providing leave, by putting them in touch with the right providers, using telemedicine, reducing any stress and continuing to advocate for workers.” &