The onset of the COVID-19 pandemic was accompanied by dire predictions around its potential impact on Workers' Compensation (WC). Business shutdowns, layoffs, presumptive compensability, remote work and delayed medical treatment were just a few of the immediate challenges. Many anticipated a significant increase in both claim frequency and severity rates and there were fears that this line of coverage would soon see significant rate pressure. With the clarity of hindsight, Lockton has reviewed the 12-month results and found that much of what was predicted never materialized. Although the pandemic is far from over, our analysis reveals that the Workers' Compensation system has thus far been able to absorb the impact of the pandemic without much difficulty. More importantly, WC premium rates have remained the single bright spot in an otherwise challenging marketplace.
This graph provides a preview of how our client’s WC claim volume was impacted in 2020, discussed in more detail in the paper.
Lockton analysts are continuing to assess the full picture of the pandemic's impact with further studies. Our current view indicates that the workers’ compensation system was able to absorb COVID-19 as a new cause of loss, without a significant increase in loss costs, but future analysis will confirm if these early trends are valid or simply the lull before the storm. Take a look at the full workers' compensation report which features current trends impacting the industry here (opens a new window).