The COVID-19 pandemic has upended lives, families, business routines, and the economy. Today, despite an uptick in May, 21 million people are unemployed in the United States, and the workforce has dropped to 137 million. Labor force participation has dipped to the lowest rate since the recession of 1973–1975.
The grim realities of the pandemic and the recession have created a unique set of challenges for the workers compensation system. We are being tested as never before.
We also know that the system is strong and resilient, with more than 100 years of experience in dealing with change and uncertainty. I am confident in our ability to respond effectively.
As NCCI’s Chief Actuary Donna Glenn outlined in the 2020 State of the Line Report, the COVID-19 pandemic has been a shock to the economy and the workers compensation system.
Almost overnight, healthcare workers, delivery people, and grocery store staffers were moved to the front lines of a fast-moving crisis. Millions of other workers began telecommuting, and millions of businesses temporarily shuttered.
Given the novel nature of this coronavirus, statistics change daily on infection and death rates, hospital capacity, and our understanding of best practices in care.
Lawmakers, policymakers, and regulators have pushed to consider a wide range of responses to this unique workers compensation exposure, and it has sparked intense debates. Five states have already enacted legislation and at least 10 states are considering or implementing significant rule changes in compensability and presumption.
It is clear that this pandemic and recession will affect every aspect of workers compensation.
Rebounding From the Shock
People facing a massive crisis often become immobilized. But within the workers compensation industry, the initial fear and uncertainty are giving way to a clarity of purpose. Together we must deliver for injured workers and their families and maintain a strong, healthy workers compensation system.
For our part, NCCI has initiated a series of steps to help the industry rebound from the shock of the pandemic. Specifically, NCCI has:
- Created a financial modeling tool to evaluate the potential cost impact of various infection levels and changes in presumption laws. This tool helps policymakers, regulators, and others make well-informed decisions.
- Generated weekly updates on our COVID-19 and Workers Compensation: What You Need to Know—Frequently Asked Questions page on ncci.com, which address rule changes, the reclassification of payroll, and other important issues.
- Focused our latest Quarterly Economics Briefing on COVID-19 economic issues.
We will continue to update these reports and provide fresh insights as data becomes available. NCCI is committed to delivering data-driven analysis to promote constructive dialogue and education. At a time when we’re seeing widespread speculation, taking a data-driven approach sets this work apart.
Confidence for the Future
The rebuilding process from the pandemic is only just beginning, and we still have many more questions than answers. From a workers compensation perspective, we know that:
- Workers compensation premiums will fall significantly in the near term as unemployment rises.
- Small businesses have been hit particularly hard. Since they often choose first-dollar coverage, workers compensation premium will fall even faster than overall employment.
- Some COVID-19 claims will be complex, even resulting in lifelong medical conditions or mental health issues.
- There are changing rules and the potential for expanded compensability for this disease. Those changes could drive up workers compensation costs significantly.
We enter this moment from a position of financial strength. I speak regularly with dozens of leaders across the industry, and they are dedicated to the mission of the system: to create and maintain safe workplaces and to respond to injured workers, their families, and the employers who rely on them.
In addition, the people on the front lines of the workers compensation system—case managers, underwriters, nurse advocates, and claims staffers—care deeply about our mission as well. They want to help injured workers recover.
Their passion, combined with the workers compensation system’s long history of resilience and responsiveness, bolsters my confidence about the future. We will meet our commitments, and we will help injured workers and the economy rebuild and recover in the months and years ahead.
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