Skaneateles, NY – Moody’s, the Insurance Information Institute, and the National Council on Compensation Insurance (NCCI) say that COVID-19 treatment expenses and lower interest rates are bad news for workers’ compensation insurers’ profits.
Joe Paduda, principal of Health Strategy Associates, and Bickmore Actuarial Principal and Vice President Mark Priven disagree. They will analyze this theory during a free webinar, Pandemic, Premiums, and Profits: Is it the Sky that’s Falling…or the Floor? on August 20, at 1 pm ET, 10 am PT.
There are clearly new workers’ compensation costs due to COVID-19 claims, but that does not mean insurers are suffering. Priven and Paduda will discuss the many effects of this unprecedented time on claims, premiums, and profits.
“Treatment for COVID-19 patients isn’t that expensive,” said Paduda, who has conducted two surveys on how the workers’ compensation industry is faring in the pandemic. “Most of the sickest patients are over working age, only two-thirds of COVID-19 claims are being accepted, and the average case across all payer groups costs less than $25,000.
The webinar will examine business closures, interest rate decreases and other economic factors related to the pandemic’s disruption to the US economy. With roughly 30 million unemployed, premiums will decline as will claims counts and costs. Respondents to the Impact of COVID-19 and Employment Changes on Workers’ Compensation survey predict that there will be 20 percent less new injury claims in 2020 than in 2019.
“This is what’s scary,” Paduda said. “It’s not about profitability; it’s about premiums.”
At this time, the system-wide decrease in costs of non-COVID-19 claims outweighs expenses associated with COVID-19 claims, according to Priven. “For most industries, the story so far is the impact of COVID-19 on the economy rather than COVID-19 claims themselves,” he said.
Source: Health Strategy Associates/King Knight