A new analysis released Monday by the Florida-based National Council on Compensation Insurance (NCCI) speculates that workers’ compensation premiums in the U.S. will likely drop as employment declines and businesses fail due to the novel coronavirus (COVID-19) pandemic.
The NCCI analysis, titled Economic Impacts of Coronavirus on Workers Compensation, examines how the COVID-19 pandemic will affect the workers’ compensation insurance system in the U.S.
“There is no greater issue facing the nation and the economy than the coronavirus pandemic,” said Bill Donnell, president and CEO of 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.”
According to the report, more than 22 million Americans have filed unemployment claims in the last month due to the coronavirus. This significant drop in payroll will likely have an impact on the workers’ compensation industry’s premiums and workplace injury rates. The exact effect it will have on premiums is difficult to determine because the layoffs aren’t even across all industries.
“While coronvirus-induced layoffs are severe and widespread, they are not uniform across all sectors of the economy. There is a broad divide between businesses that are public-facing or worksite-centric and businesses for which telecommuting is a viable temporary solution,” the report notes.
Many of the layoffs haven’t been concentrated in industries with high premium rates, such as manufacturing and construction. The businesses hit the hardest—entertainment, travel, hospitality, and retail—don’t have exceptionally high premiums.
Although there may be a spike in demand for services like home delivery, app-based platforms that provide those services (e.g. Grubhub and DoorDash) often use independent contractors who aren’t covered by workers’ compensation. Any new hires will be insignificant compared with job losses in other sectors, according to the report.
The frequency of workplace injuries is also expected to decline in most sectors of the economy. The diversion of medical resources due to the pandemic may increase the duration and cost of existing claims.
Another potential effect for workers’ compensation is whether the coronavirus will be considered compensable—an issue that is likely to vary from state to state, according to the report. Workers’ compensation laws do provide compensation for “occupational diseases” contracted at work, but many states don’t consider “ordinary diseases of life” like the flu or the common cold as compensable illnesses.
Some states currently have pending legislative initiatives to expand the coverage for essential workers and include the coronavirus, but many don’t. This may change in the future as lawmakers consider policy changes in reaction to the pandemic. Until then, it is recommended for workers who believe they were exposed to COVID-19 at work to inform their supervisor and document everything—it may end up helping your case later.
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