Workers comp captives adjust to pandemic, employee shortages

The COVID-19 pandemic and the rise in workers quitting their jobs have created challenges for employers, which could affect their captive programs, a panel of experts said.

Captive owners may be more willing to pay workers compensation claims to retain staff during the so-called Great Resignation, they said during a session of the Captive Insurance Companies Association international conference in Tucson on Tuesday.

In addition, captive owners are improving safety and return-to-work programs, the panelists said.

At the beginning of the pandemic, employers sought to deny COVID-19-related claims unless there was a legal presumption requirement, said Amy O’Brien, vice president TPA sales at Gallagher Bassett Services Inc. in Rolling Meadows, Illinois.

“But with omicron and the Great Resignation, we’re seeing a change where employers are saying, ‘What can I do to get this person back to work sooner?’” she said. “We are seeing employers not wanting to nickel and dime these cases.”

The claims experience has also shown that COVID-19-related comp claims often don’t result in payments, Ms. O’Brien said.

Since the pandemic began, Gallagher Bassett has seen about 90,000 claims that included a COVID-19 factor, and more than 60% closed with no payment, often because there were no related medical expenses, she said. For the 40% that did result in a payment, the average payment was $4,000.

Employers have also introduced more light-duty positions to retain employees and bring them back to work, said Amy Klatt, Atlanta-based vice president of captives and programs claims at insurer Skyward Specialty Insurance Group Inc.

The pandemic also resulted in employers’ improving safety as they sought to prevent the spread of the disease, said Katie Wildman, risk adviser-alternative risk transfer at BevCap Management LLC, a program manager in McKinney, Texas.

“They’ve upped their game in safety and bringing in the equipment necessary to make sure their employees feel safe on the job,” she said.

In addition, employers are asking supervisors to take a more hands-on approach with injured workers to ensure they are treated and the employees feel they are being taken care of, Ms. Wildman said.

The worker shortage has also created safety concerns, with some trucking companies using 18-year-old drivers for tractor trailers, she said.

Truck drivers under the age of 21 are four times more likely to be involved in an accident, Ms. Klatt said.

“It’s super important that captive owners train, retrain and enforce safety,” she said.

Employers are also considering being more lenient with claims when employees contract COVID-19 in a medical facility where they are being treated for a work-related injury, Ms. O’Brien said.

“We are seeing some employers in the end deciding that from a moral standpoint, especially in the case of an ultimate fatality, that they really want to pay out on that claim,” she said.

An insurer covering a captive, though, is obliged to follow the law on such claims and would not want to set a precedent of paying claims that are not covered, Ms. Klatt said.

“We can empathize with an employer, we can try and look outside the box and see if they have life insurance for their employee, but, from a carrier standpoint, we will ultimately stick to whatever is the statute and the law applied to the claim,” she said.