If there’s one bright jewel in the crown of insurance profitability today, it would be Workers’ Compensation with surprisingly low claims in 2021. Having a significant amount of remote and hybrid work, as well as a worker shortage due to many choosing not to return to work, are some key factors contributing to the lower claims threshold. 

These factors put the market in a great position going into 2022, and rates will remain flat or even decrease throughout most of the country. Right now, medical inflation is persistent and may impact the cost of claims, but the industry is strong enough to absorb the impact. 

Pandemic Impact in 2022 

Workers’ Compensation continues to be the line with the most pandemic-related claims, although approximately 95% of claims totaled less than $10,000. Through August 2021, healthcare workers and first responders accounted for over three-fourths of all COVID claims. 

Before 2020, Workers’ Compensation presumption laws focused mostly on first responders, but government leaders temporarily expanded them to include essential workers. While many of these laws will expire in 2022, the expansions will set a precedent for covering all essential workers and more infectious diseases in the future. A workplace outbreak will be more likely to be covered by Workers’ Compensation if: 

  • There is presumptive legislation creating a pathway for claims. 
  • There is an elevated risk of contracting a communicable disease because of the line of work. 
  • There is appropriate contact tracing and it’s easy to determine the time and place of transmission. 
  • There are state statutes and precedents in favor of Workers’ Compensation claimants. 

The focus on COVID-19-related claims and vaccination mandates observed in late 2021 will continue this year; particularly for the states that pre-filed Workers’ Compensation related COVID-19 vaccination legislation for the 2022 legislative session (Alabama, Kentucky, New Hampshire and South Carolina). 

In terms of remote and hybrid work, the pandemic has created more uncertainty in defining “employment.” Many employers may have to modify class codes, add additional states to their policies to account for all remote workers, and establish guidelines for working from home. More claims from ergonomic issues are expected in 2022 due to workers conducting business in remote spaces that aren’t designed for work. 

There are states considering legislation to reverse the ability for employers to direct care in the event of a claim. The legislation would majorly impact Workers’ Compensation insureds in California and Colorado. 

Risk Innovations is a specialized Workers’ Compensation wholesaler and our brokers will provide your clients with the best coverage and carrier partners that match their unique needs. Contact us today to get started.

*NOTE: This information first appeared as a section of “Riding the Waves of Change in 2022: The Jencap Insurance Industry Outlook.” To download your free copy of the whitepaper, visit https://jencapgroup.com/2022-industry-outlook.

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