As the nation continues to navigate the COVID-19 crisis and states gradually lift restrictions, a critical question remains for insurers: how will the pandemic impact workers’ compensation claims?
With thousands of essential employees reporting to work throughout the crisis—including health care workers who treat COVID-19 patients—there could be an influx of workers’ compensation claims related to the virus. And that can cause significant disruption to claim operations in terms of costs and claims management.
Here’s a look at some of the challenges the workers’ compensation industry may face and how your organization can help manage the potential rise in frequency and severity resulting from the crisis.
Eligibility expansion will likely increase costs
To understand the pandemic’s impact on workers’ compensation, we must first determine whether COVID-19 claims qualify for workers’ compensation. While that may seem like a case-by-case decision, many states are already working to address those determinations. Several states, including California, Kentucky, Louisiana, Minnesota, New York, Ohio, and Pennsylvania, have introduced legislation creating a presumption that COVID-19 is compensable for certain essential workers, such as first responders and health care workers. This presumption of eligibility can potentially lead to a significant increase in claim payouts. Consider these statistics:
- The National Council on Compensation Insurance (NCCI) reports that if only 1 percent of workers are awarded benefits for COVID-19 claims, workers’ comp system losses will increase by 8 percent nationally. If 10 percent of workers are awarded benefits, costs will increase by 85 percent.
- The California Workers’ Compensation Insurance Rating Bureau said that presumptive eligibility could increase costs by $11.2 billion, which is 61 percent of the state’s total workers’ compensation costs.
- New York’s rating bureau projects that proposed workers’ compensation legislation in the state could increase costs by $31 billion.
Whether these states or others, enact compensable legislation remains to be seen. Either way, insurers can likely anticipate a rise in related claims and costs, even by conservative estimates.
Adjusters face unique challenges with COVID-19 claims
The current crisis and subsequent fallout present unique challenges for claims handlers. For one, most adjusters are accustomed to handling injury claims—not illness claims. These types of claims can be challenging to manage, especially for adjusters not trained in the nuances of illness claims, and that lack of experience can lead to delays and higher costs.
Additionally, the sheer volume of claims can stretch adjuster resources and hinder productivity. Not only will organizations likely have to manage a spate of COVID-19 claims, but they’ll also likely have to process a backlog of open claims where treatment was disrupted or delayed because of stay-at-home orders.
Remote work is also a factor. With adjusters working from home, it can be difficult to quickly get the right resources in the claim, which can negatively affect severity and settlement costs.
Analytics augment workers’ compensation claims management
While these are unprecedented times in workers’ compensation, analytics can help you navigate through them. Analytics provide insights to help you manage claim severity and frequency more effectively. In particular, analytics can help you handle the three primary factors affecting claim severity during the pandemic—telemedicine, postponed treatments, and claim staff working remotely.
Telemedicine sessions increased by 50 percent in March, and those types of visits are on pace to top 1 billion this year. The lack of in-person health care visits can have a significant impact on treatment and return-to-work timelines, but analytics can help you identify severe claims even in the absence of conventional treatment to improve oversight of those types of claims.
For those who had medical treatment or exams postponed, some injuries may have improved with time, while others may have worsened. Analytics can help you appropriately triage those claims to the correct handling unit based on severity.
Analytics can also help remote claims teams make faster and more informed decisions with insights to improve triage and get the right resources involved quicker, whether that’s finding the right provider, identifying opportunities for case management, or referring claims to SIU.
The right tools to meet today’s challenges
Some insurers are already seeing an increase in workers’ compensation claims, and any presumptive eligibility that may take effect, could cause cases to significantly spike. Having an analytics solution in place can help you manage surges in claim volume and severity.
ISO Claims Partners offers a predictive analytics solution for workers’ compensation claims. It scores claim severity on a one-to-ten scale from first notice of loss through claim closure, helping you triage and allocate resources accurately throughout the life of the claim.
