- Andy Adams
One Place Insurers WILL PAY COVID-19 Claims: Workers Compensation
So far it is the claims NOT BEING PAID by insurance carriers that has been the focus of media and now lawsuits. As we have discussed before, there is very little (if any) insurance coverage for business interruptions related to the COVID-19 shut downs. But, that does not mean insurance carriers are avoiding ALL claims and will come out of this smelling like a rose. Workers compensation claims are likely to reach the billions depending on how many workers develop the disease as something "peculiar" to their work.
For health professionals on the frontlines treating COVID-19 patients, this will be considered peculiar and claims arising from their employment will likely be compensable.
According to Claims Journal (don't worry if you have never heard of that publication -- it means you are NOT an insurance nerd), NCCI has projected a potential high and low claims number somewhere between $81.5 billion and $2 billion dollars.
NCCI on Monday released projections on the potential impact of the pandemic under various scenarios. In the worst case, 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.
On the other hand, if eligibility is limited to first responders and healthcare workers and only 5 percent of those workers are infected, the increase in costs would be just $2 billion, assuming 60 percent of claims are paid.
This is a shot in the dark and much of it depends on how broad or narrow states will define what COVID-19 exposures are compensable. Some states have broadened the presumption that it is compensable to include essential workers such as grocery store employees.
It is going to take a while for this all to shake out. In the long term, it is a good bet that COVID-19 will harden the insurance marketplace across all lines of coverage.