COVID-19 continues to have a major impact on our daily lives. Not only has the pandemic changed the physical workplace, but it has also impacted nearly every aspect of business operations. Business owners are often curious about how the virus is affecting the insurance industry, specifically workers’ compensation insurance. While many factors are still being determined, here are a few things business owners should be aware of regarding COVID-19 and workers’ compensation.
Does Workers’ Compensation Insurance Include COVID-19 Claims?
The National Council on Compensation Insurance (NCCI) has not reported an official answer to this question as of yet. According to NCCI, workers’ compensation laws provide payment for occupational diseases that arise out of, and in the course of, employment. Most states exclude ordinary diseases of life (for example, the common cold or flu). At this time, it’s unclear which category COVID-19 will be listed. While the exposure to COVID is much higher in some occupations or fields- such as healthcare personnel, medical transport (for example, ambulance personnel, paramedics) and some manufacturing – it is still undetermined whether COVID claims will be compensable to those industries.
The answer to this question may also depend on the state. Many states have attempted to pass legislation surrounding COVID claims, and some states have already expanded workers’ compensation coverage to include workers in higher-risk occupations for COVID. To keep up-to-date on these legislative efforts, NCCI has published a helpful chart on each state’s current legislation and its status here.
How Are Workers’ Compensation Charges Affected?
COVID has forced many businesses to make tough decisions regarding their workforce. While some businesses were forced to furlough employees, others were able to keep some or all of their workforce and adjust their daily job duties. Employers can continue to pay their employees while they are working from home, “telecommuting,” or working in the office. For example, a higher-risk field worker with a higher cost classification can be switched to a clerical or telecommuting code at a lower cost, temporarily. Some employers chose to pay employees even though no work was available. This had an impact on the workers’ compensation industry, with mass reclassifications to adjust operations accordingly. Read more about NCCI’s response to the effect these changes will have on premium here.
What Will Be the Impact on Loss Costs and Rates?
NCCI has already published its guidelines for the 2020-2021 rate-filing season. The question business owners want to know is whether the impact COVID-19 had on workers’ compensation costs will be reflected in loss costs/rate filings. As of right now, this filing season’s loss cost/rate filings will be based on pre-COVID-19 premiums and loss data and will not include a modification for COVID-19. When deciding rates, anticipated losses and payroll during the forthcoming period are considered. In this case, for the 2021-2022 year, the uncertainty surrounding the pandemic prevents determining an accurate future loss estimate, and forecasting COVID-19 claims in the future period is indeterminate. Future impacts of COVID-19 are still unknown and could still have a tremendous impact on workers’ compensation in the end.
To stay informed about workers’ compensation during the COVID-19 pandemic and how it may affect your business, please reach out to Harbor America. Our workers’ compensation team and safety and risk management professionals can provide the most up-to-date information from NCCI, as well as state-specific rulings concerning COVID and workers’ compensation insurance. Our team of experts will help you work through the future impacts of the pandemic on both the workers’ compensation industry and your business.