A Tough Year For Workers Compensation
By Lonce Lamonte - July 29, 2020
It is predicted to be a tough year for workers’ compensation. It most likely will not come back to its 2019 strength for a few years. Maybe more.
The specter of COVID-19 is creating massive uncertainty in the workers’ compensation line. This pandemic could not have been considered or predicted prior to 2020. Thus, most experts predict that 2020 will be a most difficult year for workers’ compensation insurance.
Today’s rates are guessed to be insufficient to cover current exposures. Also, there is still a lack of data on COVID-19’s true impact.
How rebuttable presumptions passed in California, Connecticut, Illinois and Vermont — which extend workers compensation to essential workers presumed to have contracted COVID-19 on the job — will impact the industry present a substantial challenge for risk managers.
Low interest rates are also affecting the workers compensation line. Interest rates are a significant part of rate calculations for long-tailed insurance lines like workers comp that rely on the investment income that higher interest rates provide.
Interest rates are presently incredibly low, and it seems it will be challenging for workers’ compensation to break even this year, and possibly in near future years, in spite of the fact that in recent past years comp has been a profitable line of insurance.
lonce@adjustercom.com; Lonce Lamonte, journalist and editor, adjustercom.
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