Insurance premiums for workers could fall by nearly 20% in the second quarter of 2020 and are unlikely to recover by 2023, according to a report released Thursday by the Deloitte Center for Financial Services.
With the number of employees or redundant due to the COVID-19 pandemic, workers' compensation premiums – driven by payrolls – will see a decline that will likely extend into early 2021 and may not return to pre pandemic levels for several years, the financial analysis arm of New York-based Deloitte LLP said in its report.
Deloitte's financial service center, together with Deloitte's actuarial practice, studied 25 years of net tested premiums from several property / damage districts to predict the effect of the pandemic on the premium volume.
Deloitte found that unemployment was 4.4% near the beginning of the year before it nailed to 1
The baseline scenario predicts that the comp premium volume could fall 19.5% in the first two quarters, and another 4% in the third and fourth quarters of 2020 before settling in the first quarter of 2021. If the recovery is even slower, workers' premium volume may decrease more than the 20% quarter in the quarter, and a further 5.5% in the last two quarters of 2020. If the economy and the workforce jump back quickly, the premium volume is still expected to decrease by 19% quarter over the quarter, but fall by less than 3% the last two quarters of 2020 , according to the report.
But even at best, Deloitte predicts that workers 'premium volume will not return to pre-pandemic levels by the end of 2022.
"Meanwhile, insurance companies should expect a mixed bag for workers' compensation claims, with varying impact in different industries. , "the report said. "Insurance companies should also prepare for a reduction in the closing rate for claims and higher operating costs, as COVID-related claims are likely to remain open longer than average."
Insurers may be able to reduce the risk they currently face in workers comp by reviewing their standards for risk selection and pricing, note the likelihood that more covered employees are likely to continue working remotely and invest in ways to speed up the efficiency of the damages. .
More insurance and labor news about the coronavirus crisis here .