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With the rapid economic downturn brought on by the COVID-19 pandemic combined with continued insurer rate decreases in California, statewide workers compensation premium is forecast to drop by over 20% in 2020, according to a report released Tuesday by the Workers’ Compensation Insurance Rating Bureau of California.
An executive order that made COVID-19 infections compensable for workers is not likely to cause a massive uptick in claim costs, but uncertainty remains, the Oakland-based ratings agency said in its report.
The low-range estimate of costs to insurers is $0.6 billion, the mid-range estimate $1.2 billion and the high-range estimate $2.0 billion — lower than those in earlier estimates “due primarily to the limited time the (presumption) applies and the availability of information on California death and hospitalization rates by age that reflect the impact of the stay-at-home orders.”
“Since the majority of COVID-19 claims are estimated to be mild with no hospitalization, the average indemnity cost over all COVID-19 claims is estimated to be less than the average indemnity on non-COVID-19 claims,” the report states, adding that uncertainty continues to be a factor.
“Little is known yet on the likelihood of permanent disability benefits on COVID-19 claims. If permanent disability is more common than projected, indemnity costs on severe and critical COVID-19 claims could be higher.”
Other highlights of the report include:
More insurance and workers compensation news on the coronavirus crisis here.
California insurance commissioner Ricardo Lara on Monday ordered insurers in the state to refund some March and April premium payments to policyholders for a range of personal and commercial lines due to COVID-19.