I'm in the midst of a survey of workers' comp payers re the impact of COVID19; will update you as we get more information from more participants.
As always, responses are completely confidential and respondents receive a detailed survey report; a public version is also produced which is much less informative.
If you want to participate, please email HelenAtKingKnightDotCom.
I've spoken with a number of payers, vendors, and other stakeholders…for now, there are a lot more questions than answers. Here's what I'm hearing:
Frequency and claims numbers are way down – as in 20-40%. That's not surprising as far fewer people are working, and those that are don't want to go out on work comp as they want to keep their earnings coming.
Companies with large offshore workforces – think India – are scrambling to get things working after widespread shutdowns and mandatory workplace closures. This is particularly problematic in document management, scanning and Key-From-Image operations as well as off-shored UR and case management (think Philippines)
COVID claims are starting to come in, mostly from nursing home, medical and first-responder entities.
Disability duration for current claims will likely increase as a) patients don't want to or can't access medical treatment; b) some treating physicians are postponing non-essential care and won't see patients to give them RTW approval; and c; there aren't jobs to go back to.
On a closely related issue, some payers are (finally) fully embracing tele-services; PT, triage, medical visits, etc. Unfortunately, many slow-walked tele-services for years so they are not prepared to shift patients from on-site services to tele-services, thus contributing to longer disability duration and higher indemnity expense.
Cash is king. Suppliers/service entities in tight cash positions and/or with significant leverage (lots of debt) are in a very tough place. These firms have been paying their debt expense with cash flow from ongoing operations; with new claims counts falling off a cliff cash flow is also way down.
Conversely those companies with little to no debt are in relatively strong positions. Look for these firms to snap up debt-heavy competitors.
Sectors including PT, home health, transportation and translation are among those feeling the pressure.
Individual industries – think energy, hospitality, healthcare, are showing markedly different impacts from COVID19 and other drivers. While premiums are holding steady for now (from a very small sample set), there will be a big drop in payroll for April which will reduce future premiums.
Generally speaking, US P&C insurers' statutory surplus is high (about $850 billion) and investment income is in good shape, altho as 23% of US P&C investments are in equities that could change. Conversely, as most assets are in very secure bonds, the appreciation in bond prices – particularly for high quality bonds – will have a positive effect on surplus.
The key questions are:
How long will this last? I'll be posting on this tomorrow – or more accurately posting on why we don't know and won't for some time.
How much will COVID claims cost?
Will work comp end up with a large COVID19 exposure?
Disclaimer: WorkersCompensation.com publishes independently generated writings from a variety of workers' compensation industry stakeholders. The opinions expressed are solely those of the author and do not necessarily reflect those of WorkersCompensation.com.