Workers' compensation is likely to experience a rough correction financially, but experts are optimistic that the line will recover to its strength for 2019 in a few years.
However, the lack of data on COVID-19 and low interest rates is what created a lot of uncertainty in the workers' component, said panelists from the National Council for Compensation Insurance and Insurance Information Institute during a webinar on Thursday.
“Until now, very few people would have considered a pandemic a likely disaster for workers' compensation. , ”Says Jeff Eddinger, head of the senior division at Boca Raton, Florida-based NCCI.
This will be a "really difficult year" for skilled workers, says Steven Weisbart, New York-based senior vice president and chief economist at the Insurance Information Institute.
"We are dealing with interest rates that were essentially generated a year ago or at least six months ago, and that is clearly not in line with current conditions," he said. "Interest rates will probably be insufficient to cover all conditions."
One of the biggest challenges for NCCI is the lack of data on the impact of COVID-1
The only pandemic data NCCI has received so far is from medical transactions in March, and it does not expect to have its first solid COVID-19 data until September. In any case, the credit rating agency will make its 2021 course registrations according to the usual schedule, Eddinger said.
When pandemic data is available, "we will be able to take care of how influential (COVID-19) can be for workers comp," Cooper said. "I think it is natural to think about what will be the direct If you think about the direct COVID claims, it will certainly have an impact on the injury rate. "
Questions about how dismissive assumptions passed in California, Connecticut, Illinois and Vermont – which expands workers' compensation for key workers believed to have contracted COVID-19 at work – will also affect the industry, both for NCCI and risk managers, he said.The agency created a hypothetical scenario tool available on its website that allows users to change figures for frequency and severity to estimate the cost-effectiveness of COVID-19.
Low interest rates also affect workers' compensation line, Weisba said rt and noted that interest rates are an important part of the interest calculations for long-term insurance lines as workers comp who rely on the investment income that higher interest rates provide.
"Interest rates are now incredibly low – no one would have dreamed they would be so low," he said. "It looks like it will be challenging for this line to break even this year, and perhaps for years to come, even though it has been a profitable insurance business for many years."
Men Mr. Weisbart is optimistic that the line will recover from a tough year in 2020 and 2021.
"I think we may have two tough years but, beyond that, return to the kind of success we've had over the last five or so years. six years, "he said.
More insurance and work compensation news on the coronavirus crisis here .