COVID-19 workers comp claims mount, losses vague

Florida insurance officials want to know the impact COVID-19 has had on workers’ compensation insurance but the National Council on Compensation Insurance can’t provide answers.

Correspondence between the Florida Office of Insurance Regulation and the NCCI, which files proposed rates for workers’ compensation insurance carriers, shows that approximately $34.2 million in reported losses and legal costs have been reported to the NCCI as a result of COVID-19-related workers’ compensation claims.

But in a letter to state actuary Greg Jaynes, NCCI State Relations Executive Dawn Ingham says the $34.2 million in claims should be “viewed as a starting point” for COVID-19 losses and that she wasn’t able to provide a potential estimate of total losses due to uncertainty around claims incurred but not yet reported for 2020 and how already reported workers’ compensation claims will be resolved.

Moreover, Ingham said that the NCCI did not have data for self insured businesses.

The correspondence is included in a filing the NCCI made with the OIR requesting a rule change. If approved, the assessment would charge businesses an additional $20 million a year in order to pay for a workers’ compensation catastrophe fund that would cover the costs of a catastrophe, excluding terrorism, that results in more than $50 million in aggregate workers’ compensation losses across all states.

Florida is one of a handful of states that hasn’t already authorized a catastrophe fund for workers’ compensation insurance. NCCI argues that the fund needs to be established because infrequent events such as catastrophes and pandemics are not factored into the workers’ compensation rates.

To help assess the potential impact a pandemic could have on workers’ compensation NCCI partnered with Boston-based AIR Worldwide, which models risks from natural catastrophes, terrorism, pandemics, casualty catastrophes, and cyber incidents.

Meanwhile an August report from the Division of Workers Compensation shows the number of COVID-19-related workers’ compensation claims filed in July increased over prior months. The report shows there were 1,454 workers’ compensation claims filed in July, which is more claims than the previous two months combined.

Since the start of the pandemic, 46,505 workers’ compensation claims have been filed in Florida, of which 27,081 have been deemed “compensable,” including 67 claims involving deaths. The remaining 19,404 claims have either been denied in full or in part.

The state report indicates that $114,270,674 has been paid as of July to settle COVID-19-related workers’ compensation claims. That data includes insured and self insured funds.