Navigating 3 New Workers’ Comp Challenges: Tips & Resources for Insurers

Discussions about the coronavirus and workers’ compensation have dominated the industry since the early days of the pandemic. Who is responsible when an employee contracts the coronavirus on the job? How can employers ensure safe working conditions for their remote workers? What can be done to minimize losses in an economy stricken by turmoil?

The answers to such questions are relatively fluid, varying from one state to the next, and seeming to change almost as frequently as they are established. Luckily, the industry is ripe with resources to help workers' compensation insurers navigate some of these ongoing challenges as we continue to shape - and adapt to - the New Normal.

Challenge #1: COVID-19 Legal Disputes

Who pays when a claimant contracts the coronavirus at work? 

Depending upon the state, industry, and workplace particulars, an employer’s responsibility can range from the presumed source of an employee’s illness (e.g., California SB-1159) to “total immunity from civil liability” (e.g., Oklahoma SB-1946). Workers’ comp professionals are braced for a potential slew of COVID-related claims and legal battles arising out of any exceptions, disputes, or ambiguity leftover from new legislation.

Tip: Stay Apprised 

While nobody knows exactly how these issues will play out, insurers are paying close attention to trends and regulations in their states in an effort to be as prepared as possible. The National Council on Compensation Insurance (NCCI) monitors legislative activity in all jurisdictions, including the federal government. You can access their interactive map to stay apprised of developments in your own state.
Resource: Legislative Activity by State (NCCI map)

Tip: Educate Your Customers

You can also help your customers reduce the risk of workplace transmission by ensuring they have up-to-date information on how to protect their staff and customers. The Centers for Disease Control and Prevention (CDC) website contains a wealth of resources for businesses, including prevention, support, and mitigation strategies.
Resource: COVID-19 Resources for Businesses and Workplaces (CDC)

Challenge #2: Scattered Workforce

How can employers manage employee-safety in a remote work environment?

In response to the sudden onset of social distancing and shelter-in-place orders in March 2020, remote work increased dramatically, peaking at approximately two-thirds of the American workforce by the end of April. And while telecommuting is associated with a long list of documented benefits – including improved employee health, morale, and retention, along with reductions in overhead costs – one considerable drawback remains. With a dispersed staff, employers have little control over each employee’s work environment, which could lead to a liability nightmare if left unaddressed.

Tip: Create a Work-from-Home (WFH) Policy 

As suggested in a recent WorkersCompensation.com article, employers should “use telecommuting agreements to keep remote work in check, attorneys advise.” The Society for Human Resources Management (SHRM) offers a sample “Telecommuting Policy and Procedure” template to use as a starting point. However, because the needs and circumstances can differ between organizations, it is always best to seek advice from a legal professional when developing your new company policy.
Resource: Telecommuting Policy and Procedure Template (SHRM)

Tip: Update Your Remote-Access Infrastructure

In addition to the WFH policy, having the appropriate physical and digital resources is critical for a secure, effective remote-access work environment. IBM recently developed a four-step action guide to help businesses of all sizes build a solid work-from-anywhere foundation. The guide offers clear and concise instructions for setting up your applications environment, network capacity, workplace, and operations.
Resource: A CIO’s guide to extreme challenges: Four steps to radical agility and resilience (IBM)

Challenge #3: Economic Impact

How can insurers minimize the fallout from this global economic crisis?

Between pandemic-related underwriting and investment losses, early forecasts estimate the insurance industry could lose up to $203 billion globally. Workers’ compensation challenges are compounded by the fact that policies and premiums are directly related to the size of the workforce, which has dramatically dropped in recent months. Additionally, the anticipated influx of work-related coronavirus claims could potentially cost the industry up to $81.5 billion in the United States alone.

Tip: Reduce Admin Expenses

While you may not be able to shield your business from all the challenges that lie ahead, you can help insulate your margins by lowering admin expenses. Automation, outsourcing, and digitization allow you to conserve resources and focus on the more complex issues that require greater insurance expertise. Streamlined operations also lead to a better customer experience, reducing the high cost of churn and subsequent acquisition efforts. You can find specific suggestions for cost-reduction strategies in the following One Inc article.
Resource: 3 Strategies for Reducing Administrative Expenses in the Insurance Industry (One Inc Blog)

Tip: Respond to Market Shifts

Adaptation will be key for any business to survive the extraordinary set of challenges we face today. Deloitte Center for Financial Services recommends workers’ comp insurers approach this economic instability by focusing on prudent underwriting, agility, claims efficiency, and reputational management. You can find their calls-to-action for workers' compensation insurers here.
Resource: The path ahead: Navigating financial services sector performance post-COVID-19 (Deloitte)

As the rapidly changing global conditions continue to shape the insurance industry, new challenges and questions will undoubtedly emerge. Staying connected to industry resources and organizations will be vital for the health and safety of your staff and customers, as well as for the longevity of your business.

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