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California virus comp costs projected to reach as high as $33.6B

first responders

Expanding workers compensation to include a COVID-19 presumption for essential workers in California could carry an annual price tag of as much as $33.6 billion — 61% of the estimated total cost of the state’s workers comp system prior to the pandemic, the Workers Compensation Insurance Rating Bureau of California said in a statement Monday.

The bureau evaluated the financial impact of COVID-19 comp claims filed by essential workers presumed to have contracted the virus on the job at the request of the California State Assembly Insurance Committee. In its evaluation, WCIRB included health care workers, firefighters, emergency responders, front-line law enforcement officers and other essential critical infrastructure employees, as defined by Gov. Gavin Newsom’s executive order. Nearly 6.8 million workers in 16 different industry sectors are classified as essential in the state.

The researchers used data from Wuhan, China’s rate of COVID-19-related illness suffered by first responders and health care workers as its high benchmark of 60% and a low-end COVID-19 illness rate of 4%, with estimates of anywhere from 0.8% to 12% of those essential workers filing a workers compensation claim for COVID-19.

Using California’s workers compensation fee schedule, the WCIRB estimates that for essential workers with mild COVID-19 claims the average costs will be around $1,500. For severe claims, costs are estimated at about $51,000 per claim, and in critical cases, about $127,000.

Also on Monday, California’s State Compensation Insurance Fund announced that it will accept workers compensation claims for essential workers diagnosed with COVID-19 regardless of whether they can demonstrate that they contracted the virus during the course of their work

Workers must have a confirmed positive COVID-19 test and the diagnosis must occur between the time when the governor issues his stay-at-home order and before the order is lifted, according to the Pleasanton, California-based insurer. The state fund said it will also provide temporary disability benefits to any covered essential worker who must self-quarantine if they are not covered by another source.

The insurer also announced that it will double the size of its essential business support fund to $50 million and created a $50 million safety protocol fund to help businesses that were deemed non-essential with grants to defray safety-related expenses once the stay-at-home restrictions are removed.

More insurance and risk management news on the coronavirus crisis here