I’m in the midst of a survey of workers’ comp payers re the impact of COVID19; will update you as we get more information from more participants.
As always, responses are completely confidential and respondents receive a detailed survey report; a public version is also produced which is much less informative.
If you want to participate, please email HelenAtKingKnightDotCom.
I’ve spoken with a number of payers, vendors, and other stakeholders…for now, there are a lot more questions than answers. Here’s what I’m hearing:
- Frequency and claims numbers are way down – as in 20-40%. That’s not surprising as far fewer people are working, and those that are don’t want to go out on work comp as they want to keep their earnings coming.
- Companies with large offshore workforces – think India – are scrambling to get things working after widespread shutdowns and mandatory workplace closures. This is particularly problematic in document management, scanning and Key-From-Image operations as well as off-shored UR and case management (think Philippines)
- COVID claims are starting to come in, mostly from nursing home, medical and first-responder entities.
- Disability duration for current claims will likely increase as a) patients don’t want to or can’t access medical treatment; b) some treating physicians are postponing non-essential care and won’t see patients to give them RTW approval; and c; there aren’t jobs to go back to.
- On a closely related issue, some payers are (finally) fully embracing tele-services; PT, triage, medical visits, etc. Unfortunately, many slow-walked tele-services for years so they are not prepared to shift patients from on-site services to tele-services, thus contributing to longer disability duration and higher indemnity expense.
- Cash is king. Suppliers/service entities in tight cash positions and/or with significant leverage (lots of debt) are in a very tough place. These firms have been paying their debt expense with cash flow from ongoing operations; with new claims counts falling off a cliff cash flow is also way down.
- Conversely those companies with little to no debt are in relatively strong positions. Look for these firms to snap up debt-heavy competitors.
- Sectors including PT, home health, transportation and translation are among those feeling the pressure.
- Individual industries – think energy, hospitality, healthcare, are showing markedly different impacts from COVID19 and other drivers. While premiums are holding steady for now (from a very small sample set), there will be a big drop in payroll for April which will reduce future premiums.
- Generally speaking, US P&C insurers’ statutory surplus is high (about $850 billion) and investment income is in good shape, altho as 23% of US P&C investments are in equities that could change. Conversely, as most assets are in very secure bonds, the appreciation in bond prices – particularly for high quality bonds – will have a positive effect on surplus.
The key questions are:
How long will this last? I’ll be posting on this tomorrow – or more accurately posting on why we don’t know and won’t for some time.
How much will COVID claims cost?
Will work comp end up with a large COVID19 exposure?