As COVID-19 continues to affect the entire insurance market, an early look at claims trends offers a good place to start when it comes to understanding the full impact of the pandemic. Regulators are reacting differently and legislation is rapidly evolving, so establishing a record of facts and documenting information is key.
Gallagher Bassett is a leading provider of claims management services across multiple lines of coverage. CEO Mike Hessling, along with other lead members of Gallagher Bassett US, delved into these issues in a webinar on Adapting with confidence: COVID-19 claims trends, impacts and outcomes.
When it comes to workers’ comp claims, there are two major questions that are being asked: Is an employer report of a COVID work comp claim an admission of liability and how will compensability be determined?
“Reporting a claim is not an admission of liability,” said Dawn Griffin, senior vice president, US carrier practice, of Gallagher Bassett’s claim operations. “Because legislation is rapidly evolving in new territory with occupational disease, we believe it’s important to report COVID WC claims early to establish a fact record and document information that helps identify virus origin and employer actions. The decision of compensability will be addressed through investigation and determined case by case, state by state, and with involvement of the employer, and insurance carrier.”
There’s also varied impact depending on the industry. Not surprisingly, the greatest affect is on the healthcare segment with more than 40% of workers’ comp incidents being COVID-related. Significant exposure was also recorded in education, hotels, hospitality, and government.
Currently, Joe Powell, senior vice president, analytics, for Gallagher Bassett, says attorney involvement for claims as a result of COVID-19 is actually less than for other workers’ comp claims. However, if states leave gray areas relating to claim compensability, it could lead to increased litigation, especially on higher severity claims.
Another key aspect of coronavirus-related claims involves business interruption. As a result of the heavy burdens businesses are facing, insureds are looking to their business interruption coverage for possible financial relief.
“We’re seeing most of our business interruption claims coming from hospitality, retail and education, particularly from small and medium-sized businesses,” said Powell. “Business interruption claims do tend to have high reporting lag, so we expect these claims to continue to come in, despite the fact that state shelter-in-place guidelines have been in place for several weeks now.”
Similar to workers’ comp, legislation and litigation is rapidly evolving in the area; legislators are challenging the application of virus exclusions, resulting in class action lawsuits that cite allegations like the pervasiveness of COVID-19 creating a dangerous risk to surface contamination and air quality, while others allege loss of access to property, or loss of use due to non-essential business shutdowns constituting as a physical loss of property. How these will ultimately play out is ambiguous, Powell added.
As for non-coronavirus-related claims, Gallagher Bassett has recorded increased use and openness to telemedicine services. When stay-at-home orders began, medical providers started eliminating services they were willing to provide in office to emergencies and severe injuries only. This limitation of access had a direct effect on the care of injured workers and advancement of their workers’ comp claims. In response, medical providers pivoted to telemedicine options.
Gallagher Bassett has seen an eight-fold increase in telemedicine usage at the onset of a claim, which points to tools like telemedicine helping resolve claims on a timely basis. There was even an uptick in closures on faster-track claims.
“While telemedicine has been helpful with smaller claims, it has not been a strong alternative for more severe situations, as virtual services can’t support physical assessments or perform procedures and surgeries,” said Griffin. Because telemedicine is less impactful to these higher complexity claims, which account for about 80% of workers’ comp costs, telemedicine will have a mild impact on costs.
In the webinar, the Gallagher Bassett team also discuss the pandemic’s impact on other types of claims, such as auto coverage, as well as the impact of court closings. To listen to the full recording, click here.
