Attorney Alan Pierce quoted in Article “Reports Show Deep Impact of COVID on Claims, Premium” By William Rabb

Two new national reports shed light on 2020 and the impact that the COVID-19 pandemic has had on the workers’ compensation industry.

First, net written premium for 2020 has taken a significant hit, but profit levels remain strong, the National Council on Compensation Insurance said in a report released Thursday. Net premium for calendar year 2020 is estimated to be at just under $39 billion — an 8.1% drop from 2019, based on data from across the country.

But the combined ratio, a measure of profitability, will rise only slightly to 86% compared to 2019’s near-record low level of 85% for private carriers nationwide. A lower percentage indicates higher profits in the combined ratio equation.

“The extent of the actual policy year 2020 premium decline may not be known until well into 2021, after all premium audits on policies effective in 2020 have been completed,” NCCI actuaries said in the research brief.

The findings were based on NCCI estimates and data from the National Association of Insurance Commissioners. They supplement the NCCI’s financial results published in October.

The Workers Compensation Research Institute also released a study Thursday that gives a detailed look at how the pandemic affected workers’ compensation claims in the first half of last year.

The share of claims that were coronavirus-related varied greatly across 27 states that were examined. But three states stood out as having an unusually large prevalence of COVID claims.

In Massachusetts, 42% of comp claims in the second quarter were coronavirus-related. New Jersey had the second-highest number at 34%, followed by Connecticut at 23%.

Several factors affected the numbers, the report said. For starters, those Northeast states saw some of the highest COVID infection and death rates in the country in the first months of the pandemic. And as businesses were shut down early on, employment dropped and non-COVID comp claims fell significantly.

The number of non-COVID claims in Massachusetts and New Jersey fell by half in the second quarter last year, compared to the second quarter of 2019.

Also, New Jersey had already adopted a communicable disease rebuttable presumption and added a COVID presumption law in September for public safety workers. Connecticut saw a governor’s order for a COVID presumption, but not until July.

But presumptions may not have played a large role in triggering COVID claims, the WCRI researchers noted.

“It is important not to infer that the presumption laws and orders caused more COVID-19 claims,” the report said. “The positive association between presumption rules and the fraction of COVID-19 claims may arise in part because states with more severe outbreaks were more likely to adopt presumption rules.”

By comparison, three states that created presumption rules, at least for part of the year — Wisconsin, Kentucky and California — had relatively small shares of comp claims that were virus-related.

However, the California Workers’ Compensation Institute on Wednesday reported a year-end surge in which COVID-19 accounted for 28.7% of all claims filed in November and 47.4% of claims filed in December. Overall, CWCI reports that the 93,470 COVID-19 claims filed in the Golden State last year accounted for 15.7% of all claims with 2020 injury dates.

Massachusetts does not have a COVID presumption, but for all types of comp claims, the state long ago adopted a “pay without prejudice” period. That allows insurers to begin paying on claims right away, without accepting liability. A carrier can later determine compensability and halt payments, explained Massachusetts claimants’ attorney Alan Pierce.

The practice, approved by Massachusetts lawmakers in 1985, generally results in minor claims getting paid without litigation.

Still, Pierce said he is surprised by the 42% share of claims that were COVID-related. Most coronavirus cases that he has seen were relatively minor illnesses that were covered by paid sick leave or unemployment insurance.

In three of the study states — South Carolina, Kansas and Texas — none of which have adopted presumptions, less than 2% of claims were COVID-related by the end of June last year, the study found.

The WCRI study also underscored where the COVID claims are coming from. Fully two-thirds of the coronavirus claims in the 27 states were filed by workers in hospitals and assisted-living facilities, including nursing homes, in the first half of 2020.

In Massachusetts, 75% of health care industry comp claims in the second quarter were COVID-related. In Connecticut and New Jersey, two-thirds of health care worker claims were for COVID.