“Business as usual” is what the National Council on Compensation Insurance (NCCI) has promised as it navigates through COVID-19 challenges to complete its workers’ compensation rate filing season for 2021. The organization, which gathers workers’ compensation data, analyzes industry trends, and provides objective insurance rate and loss cost recommendations in 38 states, intends to “make rate filings […] according to the normal schedule,” despite a distinct lack of COVID-19 data and ongoing uncertainty around how the pandemic will develop.
The NCCI has made several COVID-related changes over the last few months, as Jeff Eddinger (pictured), senior division executive - regulatory business management at the NCCI, explained: “We began collecting payroll for furloughed workers, so that [it] would not be used in the premium calculation for those workers that were at home and not performing their usual job duties. A second rule change we made was to exclude COVID claims from the experience rating calculation. In addition to that, we’ve also been tracking orders or proposed legislation on different COVID compensability presumptions.”
As well as promising to file its 2021 rates on schedule, the NCCI is also working hard to track the direct impact of COVID-19 – the costs for workers that actually contract the virus – as well as the indirect impacts of the pandemic. NCCI practice leader and senior actuary Sean Cooper said the indirect impacts can be grouped into three categories.
“First, we’re looking at the economy. When we look at what’s happening now, and we compare it to the Great Recession [from 2007 to 2009], back in the Great Recession the job losses [...] occurred somewhat gradually, whereas [when COVID struck] the job losses that happened were pretty immediate and drastic,” commented Cooper. “Another thing that comes to mind are the businesses that were impacted. Back in the Great Recession, it was construction and manufacturing, versus now, where it’s more like hospitality, leisure and travel.
“A second category I think about is frequency of claims. NCCI reports very often on claim frequency, and if you think about the direct COVID claims - the workers that contract COVID and file claims – certainly, that’s going to have an upward influence on claim frequency. Then again, if you think about social distancing, that could tend to put downward pressure on claim frequency.
“The last category I would comment on is severity, or the average cost of claims. One of the things that’s been happening a lot more over the last few months than before, is telemedicine. I think that may tend to put downward pressure on the average cost of claims, but when we think about the fact that there may be may be limited opportunities for return to work, that could tend to increase both the duration and the cost of claims.”
Both Eddinger and Cooper alluded to the fact that the NCCI won’t have comprehensive COVID data until more like the end of September. Cooper explained that the only data the organization has received so far is that of medical transactions that occurred in March. Any transactions that encroached into April, even by one day, will not be reported to the NCCI until the end of September, when the agency will receive its first full quarter of COVID-related data, reflecting transactions between April and June. At the same time, the NCCI will receive its inaugural quarter of indemnity transactions – a new indemnity data call implemented in 2020.
“These data sources will give NCCI the opportunity to start evaluating the direct impact of coded claims, but also some indirect impacts,” Cooper added. “For example, we’ve heard anecdotally that a lot of non-essential medical treatments have been delayed. By looking at this data, it will allow us an opportunity to start getting a handle on exactly how impactful that might be for workers’ comp.”