The White House is increasing pressure on insurance carriers to reevaluate what is considered a “covered loss” during the COVID-19 pandemic.  How a Workers’ Compensation carrier will take coverage definitions and respond to a COVID-19 claim is changing so quickly that what might not have been covered yesterday, may be covered today…or tomorrow.   

Workers’ Compensation policies have two parts:

  • Part 1:  Workers’ Compensation
    • Covers work-related injury or illness that is:
      • Sustained on business premises or
      • Due to business operations that an insured company is required to pay statutorily
  • Part 2:  Employers Liability 
    • Covers a company for the obligation to pay damages for:
      • Bodily injury by accident or disease, including death
      • A condition arising out of and in the course of employment
      • A legal-recovery theory available to the employee that is beyond the legal immunity protecting the employer under the state’s Workers’ Compensation statutes

In response to COVID-19, eight states have issued executive orders or amended rules to expand eligibility for Workers’ Compensation:  Kentucky, Arkansas, North Dakota, Florida, Illinois, Washington, Michigan and Missouri.  There is significant political pressure in many states to relax or remove the requirement for an employee to prove that COVID-19 illness arose “out of / in the course of employment.”  If this burden of proof is removed in any given state, then the question of compensability might change dramatically and the legal arguments around compensability will increase accordingly. 

We are familiar with the term ‘first responders’ that applies to our police, fire, and healthcare workers and how Worker’s Compensation coverage responds to this category of workers.  However, a new category for ‘essential workers’ has emerged that applies to our grocery store, nursing home, and distribution warehouse workers.  Some states are wanting the same Workers’ Compensation coverage for first responders extended to this new category of essential worker.

Here are a few COVID-19 factors that will put pressure on the Workers’ Compensation industry results:

  • Relaxation on the burden of proof for claims compensability.  It’s usually very evident where a worker’s injury occurred, but how can they prove a worker got COVID-19 at work?
  • Latency in existing and unrelated COVID-19 claims, such as the inability or unwillingness to access previously scheduled procedures.
  • Many facilities have remained operational during the pandemic.  Workforces are already stressed and if someone calls in sick, people get overburdened and accidents happen – thus driving up loss costs.
  • Carriers are contemplating removing COVID-19 claims from experience modification actors.  The carrier deserves to be made whole to reflect money paid, so they will have to charge for it somewhere – and base rates will increase.
  • Expanding coverage definitions to ‘essential workers’ would broaden the number of workers potentially able to be compensated for COVID-19 claims.

Risk Innovations is staying on top of the ever-changing claims environment for Workers’ Compensation during the pandemic and keeping our agency partners informed.  We recommend that any claim related to COVID-19 be submitted directly to the insurance carrier for proper evaluation.  Please note that our claims contact information can be found directly on our website – click here for Personal Lines claims information and click here for Workers’ Compensation claims information.