Category Archives: Workers Compensation

Gauging Pandemic’s Impact on Insurers

While COVID-19’s impact on the insurance industry will require time to fully understand, litigation, legislation, and concerns about pricing and policy language will be with us for some time to come.

“Significant” changes in policy language seen

The majority of respondents to an Artemis re/insurance market survey believe the COVID-19 pandemic will result in “significant changes” to business interruption (BI) policy wordings.

In fact,  the U.K. Financial Conduct Authority (FCA) is conducting a review focused on obtaining legal clarity on policies connected to the pandemic and which claims are valid and which aren’t.

FCA’s Interim CEO Chris Woolard said recently that while some BI policies are paying out for virus-related issues, others remain “within dispute” due to ambiguities in their wordings.

Outside of the 67.6% who stated a belief that COVID-19 will drive “significant changes” in BI policy wordings, 21.6% expect a “moderate amount” of change, while the remaining 10.8% said the effect will be “limited.”

Loss estimates vary

The Artemis survey also shows 67% of respondents expect the industry to face between $80 billion and $100 billion of underwriting losses due to the pandemic. This is roughly in line with Lloyd’s of London’s earlier estimate of a $107 billion global industry impact.

But analysts from investment bank Berenberg said they believe global COVID-19 claims will be more manageable, estimating a range from $50 billion to $70 billion for the total bill. The analysts don’t specify whether this includes both life and non-life insurance claims from the pandemic, but they do point to the estimate from Lloyd’s of London as being too high.

“We estimate $50-70bn for global COVID-19 claims,” Berenberg’s analysts state. “Significantly less than the $107bn estimate reported by the Lloyd’s of London market estimate on 14 May.”

Las Vegas Hospitality Union Sues Employers

Las Vegas Culinary Workers Union Local 226 is suing several employers on the Las Vegas strip over unsafe working conditions during the coronavirus pandemic, Business Insurance reported.

The union, representing 60,000 workers, said in a statement it is asking for injunctive relief under the Labor-Management Relations Act based on the “hazardous working conditions” workers face.

The lawsuit alleges casino hotels have not protected workers, their families, and their community from the spread of COVID-19 and that current rules and procedures in place for responding to workers contracting COVID-19 have been “wholly and dangerously inadequate.”

The Culinary Union made a number of requests for policy changes, including daily cleaning of guest rooms, mandatory testing of all employees for COVID-19 before returning to work and regular testing thereafter, adequate personal protective equipment for workers, and a requirement that guests wear face masks in all public areas.

Best Warning on COVID-19 Workers’ Comp Laws

Insurance rating agency A.M. Best has warned that legal efforts in several U.S. states to expand workers’ compensation coverage to allow employees to claim for COVID-19 will have a negative impact on re/insurers, Reinsurance News reports.

The crisis has resulted in many employees now working from home, but a significant part of the workforce still needs to be present and public facing, and this is the group new state laws aim to support. For these workers, some states are looking to shift the burden to the insurer to prove that an employee contracting COVID-19 did not do so while on the job.

“This shift in the burden of proof could lead to significant additional losses to a segment already under pressure and result in increased reserve estimates and higher combined ratios,” A.M. Best said.

Given that assumptions used in pricing and actual loss emergence diverge significantly, these legislative changes will result in an increase in loss estimates and could affect earnings.

Businesses Ask Patrons to Waive Right to Sue

As businesses reopen across the U.S. after coronavirus shutdowns, many are requiring customers and workers to sign forms saying they won’t sue if they catch COVID-19, Associated Press reported.

Businesses fear they could be the target of litigation, even if they adhere to safety precautions from the Centers for Disease Control and Prevention and state health officials. But workers’ rights groups say the forms force employees to sign away their rights should they get sick.

So far, at least six states — Utah, North Carolina, Louisiana, Oklahoma, Arkansas and Alabama — have such limits through legislation or executive orders, and others are considering them. Business groups such as the U.S. Chamber of Commerce are lobbying for national liability protections.

Workers Comp, Liability Next Up for Virus-Related Insurance Disputes

Coronavirus-related insurance litigation is likely to move beyond business interruption coverage and into workers comp and general liability policy lines as states begin to lift restrictions on economic activity.

“There’s just going to be a bloodbath of litigation over the next 10 years,” former Mississippi Attorney General and counsel at  Weisbrod Matteis & Copley Jim Hood told Bloomberg Law this week. “Even if the governor tells you to open up, that’s not going to protect you from a lawsuit.”

The Trump administration and Republican lawmakers are insisting that an employer liability shield be included in the next round of pandemic relief legislation, but it’s unclear whether Democrats will go along with the idea.

Ask the Experts: The Impact of COVID-19 on Workers Compensation (Property/Casualty 360, May 7, 2020)

Bill to Boost Aid to Dependents of Workers Killed by COVID-19 (Business Insurance, May 6, 2020)

Workplace Testing Guide May Provide Target for Lawsuits (Business Insurance, May 5, 2020)

A Better Workers’ Comp System:  Silver Lining of COVID-19? (Property/Casualty 360, May 1, 2020)

California Facilitates Workers Comp for Virus Claims

California Gov. Gavin Newsom signed an executive order Wednesday that will make it easier for essential workers who contract COVID-19 to obtain workers’ compensations benefits. The governor said the order streamlines workers’ comp claims and establishes a rebuttable presumption that any essential workers infected with COVID-19 contracted the virus on the job. In effect, the change shifts the burden of proof that typically falls on workers and instead requires companies or insurers to prove that the employees didn’t get sick at work.

The California Federation of Labor, which asked for the change in a March 27 letter to the governor and legislative leaders, applauded the order. Dozens of business groups, led by the California Chamber of Commerce, pushed back last month on the labor federation’s request, saying the changes would force businesses to be the “safety net to mitigate the unprecedented outcomes of this natural disaster and the government’s response.”

Executive Order Threatens Stability of California Workers Compensation System (American Property Casualty Insurance Association press release, May 6, 2020)

California to Give Workers Comp to All Essential Employees Infected With Coronavirus (The Hill, May 6, 2020)

NCCI: Workers Comp Costs and COVID-19

If only 10 percent of health care workers contract COVID-19 and all of their claims are deemed compensable, workers’ compensation loss costs for that sector could double or even triple in some states, according to an analysis by the National Council on Compensation Insurance (NCCI).

Claims Journal reports that, in NCCI’s worst-case scenario, 50 percent of workers are infected and 60 percent of their claims are deemed compensable. That would result in $81.5 billion in increased costs —or two and half times current workers’ compensation loss costs — for the 38 states and District of Columbia, where NCCI tracks claims data. If eligibility is limited to first responders and healthcare workers and only 5 percent of those workers are infected, Claims Journal says, the increase in costs would be just $2 billion, assuming 60 percent of claims are paid.

From the Triple-I Blog:

ECONOMY STARTS REOPENING AMID NEW PANDEMIC PROJECTIONS

 

 

FAQs about COVID-19’s Impact on Workers’ Comp

Dr. John W. Ruser, President and CEO of the Workers’ Compensation Research Institute (WCRI), contributed this Q&A about the role workers’ compensation insurance plays in the coronavirus pandemic.

Dr. John Ruser

During this pandemic, many workers (nurses, police, grocery store clerks, transit professionals, etc.) are considered essential, potentially putting them at heightened risk for contracting COVID-19. A key question, of course, is whether a worker who contracts COVID-19 is compensated under workers’ compensation for income loss and medical expenses.

Below are some frequently asked questions that get posed to me as president and CEO of the Workers Compensation Research Institute (WCRI), which is an independent, not-for-profit research organization that provides high-quality, objective research and statistical information about public policy issues involving the various state workers’ compensation insurance systems in the United States.

Q1: Is COVID-19 covered under workers’ compensation and if not, why not?

A1: Historically, communicable diseases, like the flu, have generally not been covered.  Workers’ compensation covers injuries and illnesses that arise out of and in the course of employment. It is generally difficult to establish work-relationship for a disease that could be contracted anywhere. Indeed, some states’ statutes bar compensation for communicable diseases. In the past few weeks, though, a number of states have taken steps to expand workers’ compensation coverage to include COVID-19 for certain groups of workers.

Q2: What is the course of action for states seeking to cover essential workers impacted by COVID-19?

A2: Some states consider that their current laws, regulations and procedures are sufficient to provide compensation for workers who demonstrate that they contracted COVID-19 at work. Other states have changed their rules, either by executive order or by legislation, to increase the likelihood that a worker who contracts COVID-19 may be eligible for workers ’ compensation. The states vary in terms of the scope of workers covered and in terms of the burden of proof required by an ill worker to establish work-relatedness. A number of states’ laws and orders cover only first responders or health care workers. Others expand coverage to include other groups of workers deemed to be essential, e.g., grocery workers. In some states, the worker may be eligible for workers’ compensation if they can demonstrate that their illness was the result of their employment or occupation. In other states, for the workers covered, there is a presumption that their illness arose from work, though that presumption can be rebutted.

Q3: Is this is the first time coverage has been expanded for conditions that may arise outside of work and how are workers’ compensation laws changed?

A3: No, for example, we have seen workers’ compensation coverage expanded to include those, particularly first responders, who witness a traumatic experience and as a result have post-traumatic stress disorder (PTSD) and can no longer perform their duties.

Q4: Is workers’ compensation administered at the state or federal level?

A4: Individuals injured on the job while employed by private companies or state and local government agencies are covered by workers’ compensation programs administered by the states. The essential features of the states’ workers’ compensation systems are similar, but they may vary in terms of the compensability of some conditions, the amount of benefits paid and other features. Federal and some other workers are covered by four disability compensation programs administered by the US Department of Labor.

Q5: What does workers’ compensation cover and are the benefits across the country the same?

A5: Workers’ compensation covers all medical benefits and wages lost while off work due to the injury. It covers the first dollar of medical care and there are statutory formulas for the income benefits that replace lost wages. WCRI’s workers’ compensation laws reports are a great resource to identify the similarities and differences across workers’ compensation systems in U.S. states and Canadian provinces.

Q6: Is WCRI working on any research that will help us better understand the impact of COVID-19 on state workers’ compensation systems?

A6: WCRI has a wealth of studies that provide a pre-COVID baseline for evaluating the impact of the virus on workers’ compensation claims. This includes WCRI’s CompScope™ Benchmarks studies, which compare a range of workers’ compensation performance metrics across 18 states. In the future, we will evaluate the impact of the virus on the composition of claims and their costs, how the virus may have affected the delivery of care to injured workers and the impact of that on worker and claims outcomes, including duration of disability.

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/27/2020)

Accounting Rules
NAIC Working Group Approves Flexible COVID-19 Accounting Rules
Automobile Insurance
How the Coronavirus Could Change U.S. Personal Auto Insurance
Business Interruption
Travelers, Insured Law Firm Spar Over Civil Authority Business Income Loss Claim
States Seek to Force Insurance Companies to Pay Those With Business Interruption Policies
Covid-19 Business Interruption Existential Threat, Reinsurance Capital Availability Key: Willis Re
Credit Insurance
Governments should backstop trade credit
Litigation
The Race Is on to Lead Business Interruption Insurance Litigation
What Won’t Cure Corona: Lawsuits
6 Types Of Employment Lawsuits To Expect In The Wake Of COVID-19
Editorial: Stopping a Lawsuit Epidemic
Kudlow: Businesses shouldn’t be held liable for employees and customers getting coronavirus
Corporate America Seeks Legal Protection for When Coronavirus Lockedowns Lift
Profits & Losses
Coronavirus Costs Weigh on Travelers’ Profit
Coronavirus Will Be Largest Event in Insurance History, Says Chubb CEO
Coronavirus To Be Largest Industry Loss Ever: Chubb’s Greenberg & Lloyd’s Neal
Covid-19 P&C Insurance Industry Loss Estimated $40bn – $80bn: Dowling
Chubb Classifies Covid-19 as a Catastrophe Event
Covid-19 Claims Manageable, But Reinsurers Face Formidable Challenges: Willis Re
Specialty Lines
Companies Can Expect Higher D&O Rates, Lower Limits: Experts
Lack of Adequate Insurance Puts Healthcare Workers At Risk of Malpractice Lawsuits
Workers Compensation
States Easing Path to Workers Compensation Benefits for Coronavirus Workers
Changing Virus Guidance Creates Balancing Act For Essential Employers
Employers Pushing Back as States Expand Work Comp to Cover COVID-19
Workplace Safety For COVID-19 Essential Workers
From the Triple-I Blog:
TRIPLE-I CEO AMONG PANELISTS DISCUSSING BUSINESS INTERRUPTION INSURANCE LEGISLATION
INSURERS RESPOND TO COVID-19 (4/24/2020)
CORONAVIRUS WRAP-UP: LIFE AND HEALTH INSURANCE (4/22/2020)
CORONAVIRUS WRAP-UP: DATA AND VISUALIZATIONS (4/20/2020)

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/22/2020)

Automobile Insurance
Erie Insurance Offering $200M dividend to Auto Insurance Customers Amid Pandemic
If Miles Driven Are Down, Why Are U.S. Auto Crashes Up?
Business Interruption
Federal Lawsuits Target Insurers Over COVID-19 Business Interruption Claims
Covid-Fueled Supply Chain Disruption a Crunch Point for Insurance Claims
Businesses Contemplating Reopening Fear Lawsuits From Sick Patrons
Cannabis
20 Ways to Address Marijuana Reform Amid COVID-19
Directors & Officers
Top Exec With Coronavirus a Reportable Event? It All Depends
Financial and Business Impact
A.M. Best Forecasts Hit to Insurer Capital from Equity Exposures
Fraud
Pandemic Has Scam Artists Out in Full Force
Litigation
‘Act of God’ Disputes Are on Upswing
Travelers Hits Back With COVID-19 Claims Denial Suit
Fed-up Nurses File Lawsuits, Plan Protest at White House Over Lack of Coronavirus Protections
Travel Insurance
Impact of Covid-19 on Corporate Travel, Recovery & Way Forward
Cruise Ship Virus Losses May Hit Marine Liability Insurers
Workers Compensation
CA Virus Comp Costs Projected to Reach as High as $33.6B
Employers May Exclude Payroll to Employees Not Working for Workers’ Comp: NCCI
COVID-19 Presumptions May Lead to Billions in Workers’ Comp Losses

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/21/2020)

Automobile Insurance
Acting on ‘Thin’ Data, Auto Insurers Retain Flexibility With Premium Credits
Speeders Take Over Empty Roads — With Fatal Consequences
Business Interruption
Triple-I Economists: Enforced COVID-19 Business Interruption Payouts Would Damage Industry
Fight Over Pandemic Insurance Intensifies
Restaurants vs. Insurers Shapes Up as Main Event In D.C. Lobbying Fight
Cyber Risk
Hacking Against Corporations Surges as Workers Take Computers Home
Directors & Officers
D&O Insurance May Help Non-Public Companies With COVID-19 Claims
Financial Impact
Despite Recent Market Rally, Pandemic Will Continue to Hit Insurers’ Investments
COVID-19 to deter M&A activity in 2020: Conning
Kidnap & Ransom
Pandemic Exposes Organizations to Kidnap for Ransom Risk
Litigation
U.S. Businesses Bring Wave of Class Action Lawsuits Against Insurance Companies for Denial of Business Interruption Claims in Wake of COVID-19Pandemic
Hiscox Faces Legal Action From Chef Raymond Blanc: Reports
Ending Virus Shutdowns Too Soon Poses Legal Risk for Businesses
Reinsurance and Insurance-Linked Securities
Lack of Exclusions, Poor Wordings the COVID-19 BI Threats to Reinsurers & ILS
Workers Compensation
Utah Passes Bill to Provide First Responders With Comp for COVID
Comp Premiums Likely to Dip as Employment Declines: NCCI

From The Triple-I Blog:
MIXED REACTIONS TO WORKERS COMP COVID-19 EXPANSIONS

Mixed Reactions
To Workers Comp
COVID-19 Expansions

State workers’ compensation boards around the country are amending rules for benefits payouts related to coronavirus, and several states have expanded or are considering widening access to workers comp coverage for COVID-19 beyond first responders and health care workers.

Kentucky and Illinois this week implemented emergency orders to provide access to public-facing essential workers, such as grocery, pharmacy, Postal Service and day care workers. And Minnesota’s legislature unanimously approved a bill that guarantees people in high-risk jobs who contract COVID-19 workers comp coverage without having to prove the infection was a direct result of their job. Most licensed peace officers, firefighters, paramedics, nurses, health care workers, correction officers, workers at secure state facilities, workers at long-term care facilities, and child-care providers are among the classes included in the Minnesota measure.

Lawmakers in Louisiana and New Jersey also have proposed legislation to expand COVID-19 coverage beyond first responders and health care workers, who traditionally are covered if they are exposed to a communicable disease in the course of their work.

While employee groups and unions applaud these moves, the changes could hurt the workers comp industry, some experts warn.

Robert Hartwig, clinical associate professor and director of the Risk and Uncertainty Management Center at the University of South Carolina in Columbia, said the changes present “a potentially enormous and unfair burden on workers compensation insurers that’s completely unprecedented in history.”

Hartwig pointed to the difficulty proving that the transfer of a communicable disease occurred on the job and added, “This is potentially extraordinarily costly to workers comp insurers, but also to many large employers who have either very high-deductible programs or are largely self-insured.”

He said these changes also could be “potentially catastrophic” to workers compensation state funds.

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/17/2020)

Auto Insurance
Stay-at-home Pandemic Orders Reduce Auto Claims Almost by Half
As Coronavirus Empties Streets, Speeders Hit the Gas
Business Interruption
UK Watchdog Orders Insurers to Pay Small Business Claims Quickly
Cannabis Insurance
Pandemic Could Shrink Cannabis Insurers’ Premiums, Market
Cyber Insurance
Preventing Losses Due to Growing Cyber Crime During Coronavirus Crisis
As Attacks Rise, Paladin Offers Cybersecurity Platform Free to Insurance Agencies
Disaster Preparedness
‘Uncharted Territory’ as Wildfire Fighting Adapts to Pandemic
Insurance-Linked Securities
Artemis Live: Interview with Tom Johansmeyer, Head of PCS
Litigation
Nashville Bar Sues Insurer Over COVID-19 Loss Claim. Experts Say It Won’t Be the Last
Businesses Warn Fear of Liability Lawsuits Could Stall Rebooting of Economy
P/C Industry Impact
Suddenly There is Big Demand for Pandemic Cover, Says Underwriter
Chubb CEO: Forcing Insurers to Pay Pandemic Loss Claims is ‘Plainly Unconstitutional’
Allianz CEO: Pandemic Hit “Like a Metororite”
From Hacker Attacks to Shareholder Lawsuits, Insurance Industry Braces for COVID-19 Fallout
Public Health and Safety
What FDA Says About Food Safety Amid COVID-19
Travel Insurance
Travelers Consider Their Risk Tolerance
HOLIDAY HELL How to Get a Refund on Your Holiday if it’s Cancelled and How Long Should it Take to Get Cash Back
Workers Compensation
Workers Compensation in Wake of COVID-19

From the Triple-I Blog:
INSURERS RESPOND TO COVID-19 (4/17/2020)
TRIPLE-I BRIEFING: SURPLUS IS KEY TO INSURERS KEEPING POLICYHOLDER PROMISES
PUTTING CAR INSURANCE PRICES INTO PERSPECTIVE

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/16/2020)

Legislation and regulation
Democrats Plan Legislation to Force Insurance Companies to Pay Out for Pandemic Losses
Thompson Introduces the Business Interruption Insurance Coverage Act
Lawmakers Advocate Stimulus Aid to Insurers on Business Interruption
SC Proposes Bill Over Coronavirus-related Business Interruption Claims
NJ offers grace period for insurance premium expenses
Coronavirus Regulations: A State-By-State Week In Review
Litigation
COVID-19, business interruption and bad faith litigation
P/C Industry Impact
No Evidence COVID-19 Industry Loss Will Match Large Catastrophe Years: Flandro
How Insurance Claims Pros Are Adjusting to Pandemic Complications
COVID-19 Response ‘Could Bankrupt the Insurance Industry’: Insurance Defense Lawyer
Coronavirus response: Short- and long-term actions for P&C insurers
Auto Insurance
Analysts: Auto Insurance Coronavirus Rebates a Solid Move in Short Term
Will Fewer Drivers on the Road Mean Lower Auto Losses? It Depends
Auto Insurers Offer Rebates as Traffic Abates During Pandemic
Business Interruption
Neglecting Idle Facilities Amid COVID-19 Will Cost Companies, Warns FM Global
Cyber
Working From Home? Don’t Let Cyber Criminals Break In
Hospital Hackers Seize Upon Coronavirus Pandemic
Workers Compensation
COVID-19 Comp Expansions Could Have Significant Impact on Industry

CORONAVIRUS WRAP-UP: PROPERTY AND CASUALTY (4/15/2020)

Litigation
Legal Experts Prepare for Battles Over Business Interruption Cover
Travelers Sued Over Coronavirus Coverage
Meal Delivery Services Sued Over Restaurant Prices Amid Pandemic
Pandemic Relief
Swiss Re Donates CHF 5 Million to Support COVID-19 Relief Efforts
Axis Capital, Swiss Re Pledge Donations to Pandemic Relief
Australia’s QBE to Raise $825 Million to Counter Coronavirus Crisis
CA Workers Comp Fund Creates Virus Relief Programs for Policyholders
Coronavirus Litigation Against Nursing Homes Takes Off in Tennessee
Regulation and Legislation
AL Regulator Eases Process for Auto Insurers to Reduce Policyholder Premiums
CA Insurers Ordered to Give Refunds
Politicians Push Insurers to Resolve Mounting Disputes Over COVID-19 Losses

Related:
Risk Manager is Suddenly a Hot Job
How Homeowners Insurance Claims Have Changed During the Pandemic