Fall in workers compensation premiums in US expected, says NCCI

Workers compensation premiums in the US are likely to fall more than employment during 2020, as a result of Covid-19, according to a report from the US National Council on Compensation Insurance (NCCI). In its latest quarterly economics briefing, Economic Impacts of Coronavirus on Workers Compensation, NCCI explores the impact of Covid-19 on employment, business closures, injury frequency, injury severity, and the ratio of premium to payroll. “There is no greater issue facing the nation and the economy than the coronavirus pandemic,” commented Bill Donnell, president and CEO of the NCCI. “This report takes a look at how Covid-19 is impacting employment – from mass furloughs and layoffs in some industries, to increased but likely temporary hiring in others – and what changes we may see in terms of claims and premiums.” Leonard Herk, the NCCI’s senior economist and author of the report, added: “Although workers compensation coverage for coronavirus infections remains uncertain and is likely to vary from state to state, we think that the pandemic will have other significant impacts on the workers compensation system. To give just a couple of examples, reduced access to medical care and deferred return to work are likely to increase the severity of existing claims, while workers at risk of layoff may either delay or accelerate reporting new claims.” The report states that coverage of coronavirus claims under workers compensation is an open question, the resolution of which is likely to differ across states. “Compensability is one of the first questions that comes to mind for workers compensation; it is also one of the most complex to answer. The standard paradigm for workers compensation involves musculoskeletal injuries incurred in the workplace. Circumstances under which diagnoses of an infectious disease such as coronavirus may also be covered as a workplace injury are less clear and likely to be interpreted differently in different states,” it notes. It goes on: “A key consideration is the degree to which a worker’s occupation creates an increased risk of coronavirus infection compared to the general public. Front-line healthcare workers in direct contact with coronavirus patients presumably face a heightened risk of infection, while workers telecommuting from home may arguably face no greater coronavirus risk than they would if they were not working. But between these two stylised examples, many other occupations present nuanced considerations for which clear precedents are lacking.” The report also notes that reduced access to medical care during the pandemic may increase the duration of existing claims. The report notes that diversion of medical resources to fight coronavirus reduces their availability for workers compensation. “For active claims, return to work can be expected to take longer because of deferred treatment and because some jobs will remain furloughed even after the claimant’s disability period. Elective treatments involving hospital or outpatient facilities diverted to coronavirus are likely to be postponed until hospital capacity is no longer stressed,” the report states. The NCCI points out that deferral of hospital treatments and physical therapy means longer claim duration, which translates into higher indemnity payments and probably more medical expenditure overall, which in turn translate into higher severity for active workers compensation claims. In addition, the report notes, a claimant cannot return to work after medical treatment if work is furloughed, which also increases indemnity severity for active workers compensation claims. The report also looks at the impact on work-related motor claims, pointing out that motor vehicle accidents are likely to decline due to reduced business travel and less congestion. The latter, it states, is a major contributor to motor vehicle accidents, so accident frequency in commercial trucking is likely to go down for as long as other drivers stay off the roads.

Fall in workers compensation premiums in US expected, says NCCI

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