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Workers compensation premiums will likely drop as employment declines, according to a report released Monday by the National Council on Compensation Insurance.
In the past month, more than 22 million unemployment claims have been filed due to the coronavirus, and this significant drop in payroll will have an impact on the workers compensation industry’s premiums, as well as injury rates and claim frequency, reported Boca Raton, Florida-based NCCI in its Economic Impacts of Coronavirus on Workers Compensation quarterly briefing.
The hospitality, entertainment, travel and retail industries have suffered the most severe economic impacts. However, these businesses tend to have lower premium rates per employee. Although some businesses, such as grocery, medical supply and home delivery are seeing their demand surge, any new hires are insignificant compared with employment losses in other sectors, according to the report.
For current claims, the diversion of medical resources may extend the length of a claim, increasing indemnity and medical costs. If an injured worker is furloughed, that may also impact indemnity severity for active comp claims. Workers may also defer claims for nonacute injuries, or if they fear permanent job loss be more likely to report these types of injuries, the NCCI report said.
Another potential effect for workers comp is whether coronavirus will be considered compensable — an issue “likely to be interpreted differently in different states,” according to the report.
More insurance and risk management news on the coronavirus crisis here.