Claims Are Going Down, But Insurers Are Worried About Profits
In California, you can file for workers’ comp if you are exposed to and contract the 2019 coronavirus disease (COVID-19) while you are working. Although this rule may cause more COVID-19 claims, the workers’ compensation system has experienced a decrease in claims overall.
This is why some insurance professionals are “calling Chicken Little on insurance industry warnings about the cost of COVID-19 claims.” According to an August 2020 story in Claims Journal, insurers are overestimating the costs of the COVID-19 crisis and underestimating their savings.
Simply put, workers’ compensation companies will survive COVID-19 – and they will turn a profit while doing so.
Why the Worry?
Two insurance professionals are hosting a Zoom webinar called “Pandemic, Premiums, and Profits: Is it the Sky that’s Falling…or the Floor?” on August 20.
Its leaders explain:
“They [the insurance companies] don’t want to speculate about the impact of lower claims counts but they do speculate about—and I’m doing air quotes here—the profit impacts of COVID claims.”
Countless workers have been laid off or furloughed due to the coronavirus pandemic, and employees who are not working are, by definition, not filing workers’ compensation claims.
Although the essential employees who are still working have an increased risk of contracting COVID-19 and filing claims, there are still fewer workers filing workers’ comp claims overall.
Some argue this system-wide decrease in costs outweighs the costs associated with COVID-19.
Insurers Are Still Raising Rates
Rates for workers’ comp insurance have been falling for the last 5 years, but the Workers’ Compensation Insurance Rating Bureau wants to raise premium rates in 2021. The Bureau attributes this “modest increase” to the COVID-19 outbreak, but insurance providers across the nation have experienced “record profits” over the past year.
In addition to this rate increase, The Bureau is expected to propose a COVID-19 surcharge. While decisions will not be made until September 2020, critics are skeptical.
The webinar hosts from the Claims Journal article put it best:
“Work comp has never had a good reputation. This is an opportunity for the industry—which has been extremely profitable for the past several years—to step up and do the right thing.”
How This Affects Employees
None of these disagreements or changes within the workers’ compensation industry should affect you as an employee, but they illuminate just how profit-obsessed insurers can be. Further, higher rates for employers may translate to company cultures where using workers’ comp is frowned upon, which become illegal when employers jeopardize your right to file a claim.