When looking to future insights for any market, part of the process is analyzing the wins, losses, pain points, and missed marks of the last year. A standard year may take into consideration aspects like claim frequency, claim costs, revenues, premiums, and so on. But as with most things these days, it’s no longer a “normal” year. While these details will be taken into account for 2022, the changes in these details will differ from those of a normal year. The effects of COVID-19 have been compared to the great depression, SARS, and the financial crisis of 2008 all wrapped into one. In other words- it’s been colossal. For worker’s compensation, that means new guidelines for compliance, new coverage, and the need to be highly adaptable.
New Guidelines for Workers Compensation
Aside from monopolistic states, meaning the states that require workers comp be purchased through the state itself, employers and insurance providers in each state need to keep up with different laws and regulations that can change, both in regard to COVID-19 and standard regulations. For employers that have workers’ compensation in multiple jurisdictions, it’s important to stay aware of the differences and updates in order to maintain compliance.
An insurance provider has an obligation to maintain coverage and claim details that are agreeable with all current laws. Part of their management role should be providing regular updates to any clients or employers as needed. However, the employer must also relay this information accurately within their company and to employees, to maintain compliance with the guidelines.
So in terms of COVID-19, what has really changed? Well, typically a workers compensation policy wouldn’t cover a virus or airborne illness, but with the severity of COVID-19 and its relationship to public spaces-some states are now covering it. New York, for example, will approve a covid related claim and provide benefits if there is reason to believe an individual was exposed due to their working environment. Benefits could include coverage for treatment, lost wages, and funeral expenses in the event of a death. Employees at high risk of exposure are especially likely to have COVID-19 related issues covered in their worker’s compensation, such as health care workers, first responders, transportation workers,
Aside from the actual virus, we’ve all experienced the massive shift to remote working since the start of the pandemic. Where prior, there was an obvious separation of “work” and “home”, now the lines are blurred. The hours worked aren’t as straightforward, employers don’t have control over working conditions, but of course, there still needs to be coverage for employees.
So how can this new normal be regulated? Like any case, the employee does need to be able to prove that their injury or illness occurred while performing tasks in the interest of their company. But in reality, courts are not going to deny claims simply because employees have less control. A remote worker has the right to receive workers’ comp benefits in their place of work, which is now their home. This means employees are now under the obligation to take extensive measures that ensure employees have a safe home-office setup.
Cumulative injuries, like back pain and wrist issues that happen over time, can be avoided by taking ergonomic measures. Most companies these days implement best practices in the office, but with work from home-its not as easy. Employers may want to consider allotting some budget to help employees set up a safe working environment at home. This is just one example of the new measures that need to be taken in terms of workers’ compensation compliance and prevention.
Rising From the Recession
Another outlook for 2022 is a likely rise in claims. This isn’t necessarily due to a rise in unsafe working conditions or heightened exposure (although that is a possibility) it’s really just due to the workforce stabilizing. During 2020 and a lot of 2021, there was a large percentage of people out of work and on unemployment benefits. This of course resulted in a decrease in claims and worker’s compensation benefits in general.
Complimentary to the rise in claims is the rise in premiums. Washington’s State Department of Labor & Industries (L&I) announced a 3.1% average increase in worker’s compensation premium rate for 2022. Similar trends are expected to be seen nationally in correspondence with the increase in costs to provide benefits. Again, this will vary from state to state-so watch out for changes, especially for multi-state employers.
Claim Cost Increases
An area of concern specifically is the rise in claim costs. Some data suggests that claims in some areas have risen upwards of 100% since 2018. Lawmakers and compliance experts are analyzing all the applicable data to understand the driving force behind these claims and make amendments to payouts as needed. There is potential for 2022 to have stricter claim processes. Both employers and insurers should be aware of preventative measures that can be taken, and actively support any claims from early on in the process.
Keeping Up to Date With Workers Compensation Market
There are so many unpredictable variables in the worker’s compensation market right now that it’s crucial for insurers and employers to stay agile and flexible. There could be last-minute amendments to coverage, new laws, new risks, and so on. From COVID-19 and the remote workforce to the threat of medical inflation, there’s a lot on the table. If 2020-21 taught us anything, it’s the skill to adapt to unprecedented times. And while the market is expected to be generally stable aside from a few minor changes, it’s always best to be prepared for change.