Elon Takes on the Insurance Marketplace

…sorry have to laugh, “you guys (actuaries) are good at math”. um, yeah –

That part he got right.  Very good indeed.

While I have a tremendous amount of respect for Elon and his accomplishments, this seems to be a bit out of his usual sweet spot.

Perhaps “Midas” will strike again, but my personal opinion is he got a bad renewal and now wants to go Orwellian.  All about a revolution in an industry that is perilously behind the times, but this seems not thought out –

Are we now to be graded individually against our peers?  Do we wear letters or colors based on performance.  A slippery slope —

Tesla Invites Actuaries to Help It Create a ‘Revolutionary’ Insurance Company

By | July 24, 2020

Tesla, which has been testing an insurance product for its drivers in California, is preparing to build an insurer, one CEO Elon Musk says will be “revolutionary.” And he’s inviting actuaries to join his cause.

“I would love to have some high energy actuaries, especially. I have great respect for the actuarial profession. You guys are great at math. Please join Tesla, especially if you want to change things and you’re annoyed by how slow the industry is. This is the place to be According to Zachary Kirkhorn, Tesla’s chief financial officer, the company wants to harness the data from its telematics on its cars and drivers to build the new insurance operation beyond California.

“Where we want to get to with Tesla Insurance is to be able to use the data that’s captured in the car, in the driving profile of the person in the car, to be able to assess correlations and probabilities of crash and be able then to assess a premium on a monthly basis for that customer,” he said.

He said Tesla is nearly finished with testing its California telematics product and hopes to be filing that in several more states by the end of the year with the goal of going nationwide.

Tesla Insurance Will Use Driver Video, GPS Data Subject to States’ Approval

Musk said that accuracy of information is “at the heart of being competitive” with insurance. The choice is between assessing drivers “looking in the rear-view mirror” or assessing them individually, “looking ahead with smart projections” and being able to inform them what actions they can take to reduce their insurance.

“It’s like… if you want to pay more for insurance, you can. But if you want to pay less, then please don’t drive so crazy,” Musk said, adding, “Then people can make a choice.”

He said understanding the insurance expense, such as $15,000 to fix a fender, can actually be helpful to the carmaker, allowing it to adjust the design of its cars to how repairs are done and lessen the cost.

Musk has long maintained that car insurance rates should fall as driver-assist and self-driving technology become standard.

Top photo: Elon Musk, Tesla Chairman, Product Architect and CEO. (AP Photo/Paul Sancya)

The NCCI, Presumption and COVID19

The National Council of Compensation Insurance (“NCCI”) continues to further refine its cost estimates of COVID19 for the 38 states that it oversees for the purposes of rate and rule making for workers’ compensation.  The most notable states not included in this study are California, New York and New Jersey which collectively make up about 40% of the workers’ compensation premiums countrywide.

The term “presumption of compensability” speaks to whether a COVID19 case is deemed compensable solely by the nature of the afflicted’s joe duties, scope and where work is performed.  This is different in every state with new bills and laws being drafted and legislated every day.

The preemption legislation generally falls into three buckets:

  • Bills that establish compensability presumptions for first responders (fire, police, ambulance) and/or certain healthcare workers (nursing homes, hospitals, home health etc)
  • Bills that establish compensability presumptions for essential or frontline workers.  This expands presumption into most all client-facing roles still necessary (grocery, pharmacist, mass transit, TSA, meat-packing, banking etc.)
  • Bills that establish compensability presumptions for all employees in the state

Needless to say, understanding the expected costs to the workers’ compensation system of any given state and the appropriate risk load to charge as a result starts with who will and will not “automatically” be covered and thus drive cost.  As you will note below, there is a lot of activity in regard to this issue across the country.

You can access NCCI’s state-by-state compensability tracker here.

Additionally, the NCCI has built a free on-line COVID19 “Hypothetical Scenarios Tool” that really gets into the granular on expectation of costs by type of worker and symptom group as well as the expected risk load as a result thereof.  Here is where the NCCI’s middle of the road projection is as of their last study in April with the assumptions of all NCCI states and the total workforce presumed to have contracted COVID19 in an occupational setting.  The scenario assumptions with slide bars below can be adjusted manually, but these are the “middle ion the road” defaults.

Note in this scenario of the total workplace presumed to being exposed to COVID19 in all NCCI states, the expected additional risk load is +85%.

Where I found this model to be even more interesting is on a state by state basis.  Using same “total workforce” but now selecting just Florida.

A 69% v 85% risk load and a fatality claim average being $121,118 v $341,111.  Fatalities the most important risk and cost driver with “critical claims” coming in #2.  Now if we do the same for Texas…

The risk load almost triples the national average at 236% fueled by the cost of a fatality more than double the national average, or $723,912.

This is a very powerful tool that shows all of the variables in play in the forecasting of expected costs in NCCI states due to COVID19.  As this continues to be refined we will update you.

Have a great weekend and stay safe.

California Workers’ Compensation Impact Projections – COVID19

As our clients continue to grow their businesses during the COVID19 pandemic, it has never become more important to select the right client company exposures to take risk on and those to lay off on guaranteed cost policies.  Having an underwriting strategy for risk selection and understanding of proper pricing as a result of COVID19 is an issue that needs to be focused on in this dynamic environment.

As with any projection, as time goes by, the future is understood with greater certainty.  As I continue to monitor the “risk load” attributable to COVID19 on a State by State basis, it made me think of one of my literary heroes and a famous quote of his:

“A habit of basing convictions upon evidence, and of giving to them only that degree or certainty which the evidence warrants, would, if it became general, cure most of the ills from which the world suffers.”  – Bertrand Russell
Why?  Because we are still dealing with “evidence” on COVID19 that is uncertain.   How much we can warrant forecasted outcomes as a result is therefore uncertain.  Besides the fact we are dealing with a 1 in a 100 year pandemic with no script to work off from the past, the models forecasting number of events and costs are built off of social distancing and staying at home; these variables being complicated by the reopening of States on the rise and social demonstrations triggered by the Floyd case/police brutality.
That said, based on the evidence in California at present, the middle of the road estimate is the addition of $1.2B of system costs to the current system costs of $18.3B, or 7%.
The low end is 3.3% and high end 11%.  These costs emanate from the mid-range loss estimate of 31,100 COVID19 claims.  Please note that this projection is based off the Governor’s order of presumption only lasting through July 1, 2020.  Of these expected claims, it is anticipated the costs will be as follows:
Claim Type               %               Expected Costs per Claim
Mild                           82                          $2,100
Severe                      10                           $74,800
Critical                        3                           $191,100
Death                         5                            $280,500
While I found this projection on the surface to be light, Mr. Stypla and I than contemplated the facts that California was one of the first to close and has been very strict in “stay at home” protocols.  As a result, their fatalities per 100,000 people are far less than other populous states:
Cases/ Fatalities/ 100,000
California – 347/12/100,000
New York – 1,951/157/100,000
Texas – 270/6/100,000
Florida – 307/13/100,000
New Jersey – 1,855/139/100,000
Illinois – 1,020/48/100,000
Michigan – 651/60/100,000
Wisconsin – 366/11/100,000
Ohio – 335/21/100,000
Mass. – 1,507/108/100,000
As you can see, there is a wide range of events by State with California being on the lower end of the spectrum.  So the take away is based on evidence today, California appears to be outperforming against initial forecasts and the country as a whole.  Hopefully the numbers will stand, but to belabor it, these are very fluid forecasts based on evidence available as of today.

Workers’ Compensation Super Bowl

The National Council of Compensation Insurnce (“NCCI”) hosts their Annual Issues Symposium this afternoon on a shortened and virtual basis.  There is no other conference that influences what happens with workers’ compensation reserving and pricing then this one.

All major carriers and their respective mathematical prophets will be on the line to measure profitability and the components thereof for the last year and historic.  Even more importantly this year, the prediction of go-forward profitability and pricing guidance/trend.

Click to access II_AIS2020-Agenda.pdf

Mr. Donnell starts off at 1:00, State of the Line at 1:15 and Bob Hartwig does a COVID presentation 2-3.  Very much condensed than usual and for the first time that I know of… its free!

We will be summarizing our interpretations of these presentations later in the day but please check out if you have the time.  Hartwig, especially, is a tremendous speaker –

The links below to join…

Plan to join us for NCCI’s Annual Issues Symposium—AIS Virtual<https://www.ncci.com/Articles/Pages/AIS_LiveStream_UserCapture.aspx?aisinvitelinkclick=yes>, May 12, 2020, 1:00 p.m. ET.

AIS Virtual is the premier workers compensation event offering actionable intelligence around the industry’s most relevant issues.

These helpful tips will get you ready:


  • For optimal viewing, use Chrome or Firefox and log in early to test your system’s livestreaming capability.


  • Log in will be available 15 minutes prior to our start time, and you’ll be able to enjoy our AIS Virtual preshow content as we count down to our 1:00 p.m. ET kickoff.


Following the main program, view our interactive Meet the Experts session, and access additional insights via our AIS Virtual Highlights Report on ncci.com.

For more information, and the full AIS Virtual agenda<https://www.ncci.com/Articles/Documents/II_AIS2020-Agenda.pdf>, visit ncci.com<https://www.ncci.com/Articles/Pages/II_AIS2020-Registration.aspx>.

California COVID Call to Cost Billions for Workers’ Compensation System

As expected, the largest workers’ compensation market in the country has rendered the opinion that it is presumed that anyone that is employed outside of their house has contracted the virus at work.  Prior to this order or COVID for that matter the total cost of loss in the California system was predicted to be $18.1 B.  The median risk load as a result if you include “First Responders” is $11.2 B, or 61%.  If you exclude “First Responders”, the additional cost expected is $5.2 B, or a risk load or 28%.

It will be interesting how insurance carriers and those on large deductibles react to this.

FOR IMMEDIATE RELEASE: Contact: Governor’s Press Office
Wednesday, May 6, 2020 (916) 445-4571

Governor Newsom Announces Workers’ Compensation Benefits for Workers who Contract COVID-19 During Stay at Home Order

Benefit will be available for diagnosed workers working outside their homes


Presumption will be workers contracted the virus at work; employers will have chance to rebut


Governor also signed executive order waiving penalties on property taxes for residents and small businesses experiencing economic hardship based on COVID-19; order also extends deadline for filing property tax statements


SACRAMENTO – As California prepares to enter Stage 2 of the gradual reopening of the state this Friday, Governor Gavin Newsom today announced that workers who contract COVID-19 while on the job may be eligible to receive workers’ compensation. The Governor signed an executive order that creates a time-limited rebuttable presumption for accessing workers’ compensation benefits applicable to Californians who must work outside of their homes during the stay at home order.


“We are removing a burden for workers on the front lines, who risk their own health and safety to deliver critical services to our fellow Californians, so that they can access benefits, and be able to focus on their recovery,” said Governor Newsom. “Workers’ compensation is a critical piece to reopening the state and it will help workers get the care they need to get healthy, and in turn, protect public health.”


Those eligible will have the rebuttable presumption if they tested positive for COVID-19 or were diagnosed with COVID-19 and confirmed by a positive test within 14 days of performing a labor or service at a place of work after the stay at home order was issued on March 19, 2020. The presumption will stay in place for 60 days after issuance of the executive order.


The Governor also signed an executive order that waives penalties for property taxes paid after April 10 for taxpayers who demonstrate they have experienced financial hardship due to the COVID-19 pandemic through May 6, 2021. This will apply to residential properties and small businesses. Additionally, the executive order will extend the deadline for certain businesses to file Business Personal Property Statements from tomorrow to May 31, 2020, to avoid penalties.


“The COVID-19 pandemic has impacted the lives and livelihoods of many, and as we look toward opening our local communities and economies, we want to make sure that those that have been most impacted have the ability to get back on their feet,” said Governor Newsom.


Since declaring a state of emergency due to COVID-19 on March 4, 2020, Governor Newsom has taken several actions to benefit workers on the front lines, includingpaid sick leave benefits for food sector workers that are subject to a quarantine or isolation order; critical child support services for essential workers and vulnerable populations; additional weekly unemployment benefits; and needed assistance in the form of loans for small businesses and job opportunities in critical industries for workers that have been displaced by the pandemic.


The NCCI Speaks to the Impact of COVID19 on Workers’ Compensation

Following suit with the research brief from WCIRB. Click here to access.

…done last week by the Workers’ Compensation Insurance Rating Bureau of California (“WCIRB”) on the impact of COVID19 on the California Workers’ Compensation system, the National Council of Compensation Insurance (“NCCI”) came out yesterday with the same for the 38 States that it tracks for rule and rate-making purposes. Note the numbers below do not include half the country’s volume of workers’ compensation premiums when it is considered States like California (25% on its own), New York and Ohio are not included in the below data.

Key findings of the NCCI on frequency rates:

  • % of ee’s that will contract COVID 19 on the job – <10% – 81%
    • it should be noted that the issue of “Presumption of Coverage” related to different types of occupations is the driver of the huge range in frequency – all States are presuming “First Responders” (1,176,110 workers), others to include Healthcare Workers and First Responders (9,666,420 workers) and still others such as Illinois that presumes any worker that is client facing has occupational exposure to the disease (86,351,950 total workers in the 38 States considered)
  • Infection rate is 5-50% regardless of class of worker above
  • Range of Impact of CoVid losses on overall expected losses by category of worker:
    • First Responders – PreCoVid expected losses of $1.1B with potential impact of $.1B – $1.9B… 10%-170% range
    • First Responders and Healthcare Workers – Pre CoVid losses of $3B  with potential impact of $1B – $16.2B…. 33% – 550% range
    • All Workers – PreCovid losses of $32.1B with potential impact of $2.78B – $81.5B… 8 – 254% range
    • Hospitalization rate after infection range is 1 – 31%
    • Critical care rate of 5 – 27%
    • Duration of care for mild symptoms of 2 weeks and 3 – 6 for moderate or critical cases
    • Cost per claim type:
      • Mild $1,000
      • Moderate-Severe $25,500
      • Severe $59,000
    • Impact by infection and compensability rates
      • 1% occupationally impacted, cost of loss goes up 8%
      • 5% = 42%
      • 10% = 85% – which at present is NCCI’s selection
    • Fatality rate for those infected with the virus is .5% across all classes of employees – Average impact $146,980 in death benefits (does not include medical)

My summation of what the NCCI and WCIRB are projecting is as followed:

  • The huge range in expected costs is going to be understood on a State by State basis with the issue of presumption of contraction based on occupational duties being the biggest driver
  • As each State has unique payouts for disability and death, the prediction of cost and risk load for pricing needs to be State by State
  • The healthcare segment is providing the most unpredictability – add a risk load, park the business elsewhere or stay out of the segment for now – too unpredictable
  • PEO’s can be a very important partner to insurance carriers by allowing them to understand performance data fastest due to their management of payroll
  • The smartest people I know do not know what to predict but this is a start – we probably will not have enough real data to narrow this range of expectations for months

Stay safe and we will get through this – but with our eyes open.

Why Knowing Who is Impacted by CoVid is so Important –

Foremost, I hope that  everyone is safe and sound.

Now for the bummer…

There will three outcomes from Co-Vid19 from a comp stand-point:

  •  Death (after “x” days being treated assumedly
  • Isolation (7 days of lost time will trip indemnity benefits)
  • Permanent partial disability due to lack of lung capacity, mental anguish or?  (projections completely unknown)

Being freakishly in tune with those clients that have potential claimants has never been more important.  Knowing those clients that are health care workers as well as public-facing as well. 

We will all get through this (without lawyers to litigate against us)

…an article out of the globe to illuminate potential scenarios —

Surviving ventilators, only to find lives diminished

Amid widespread use for coronavirus, breathing machines’ long-term effects on patients raise concern

Rob Rainer couldn't return to his work as a lawyer after being on a ventilator for a month due to a severe lung infection.
Rob Rainer couldn’t return to his work as a lawyer after being on a ventilator for a month due to a severe lung infection.JIM DAVIS/GLOBE STAFF

Two months after leaving the intensive care unit, Rob Rainer returned to his law practice in Revere, eager to resume his old life after surviving a severe lung infection that tethered him to a breathing machine for a month.

But as he sat down at his desk, the former hard-driving multitasker found he couldn’t stay on track with even one task. Phone conversations left him overwhelmed. He was baffled by a computer program he himself had developed.

Today, five years later, Rainer’s life is very different — his law practice shuttered, his two houses sold. At 58, he lives modestly with his wife in a small condo in Hudson, N.H.

And like Rainer, many will never be the same.

The widespread use of ventilators to save COVID-19 patients has sparked layers of controversy. Hospitals throughout the country don’t have enough breathing machines to meet the predicted demand. Proposals on how to ration them have been called discriminatory. And then, many COVID-19 patients die despite the ventilators; a new study of New York patients found that, as of April 4, a quarter of COVID-19 patients requiring mechanical ventilation had died, while 72 percent were still in the hospital and only 3 percent had been discharged alive.

Now, a new discussion is emerging: the fate of those who survive the ventilator, but awaken to find their brains and bodies altered.

Dr. Daniela J. Lamas, a critical care physician at Brigham and Women’s Hospital, once considered her job complete, and successful, when a patient survived an intensive care stay. But over the years she learned more about what happens to patients after they leave her care. Just because someone makes it through, she said, “does not mean they will be OK to reenter the world.”

Ventilators force air, sometimes with added oxygen, into a patient’s airways, essentially breathing for them so their lungs have a chance to rest and recover. Patients must be heavily sedated so they won’t feel the tube down their throats or fight the machine’s rhythm. They are typically immobile for long periods of time, leading to muscle wasting.

Although no one knows how COVID-19 patients in particular will fare over time, patients using ventilators for other illnesses typically experience long-term consequences. The prolonged immobility leaves many so feeble they can’t even sit up, and muscle weakness can persist even two years later.

Many had frightening experiences in the ICU — or imagined them while delirious — leading to post-traumatic stress disorder. Many, like Rainer, find they can’t think as clearly as before. And as they realize how much they’ve lost, patients often suffer from anxiety and depression.

Together, these physical, psychological, and cognitive changes are known as post-intensive care syndrome, a term coined in 2012. Since then, about 25 or 30 hospitals have set up clinics to help patients understand and cope with the aftermath of an ICU stay. Lamas’s “After the ICU” clinicat the Brigham is the only one in the Boston area.

Here and elsewhere, most patients are simply discharged to fend for themselves, cared for by primary care doctors who may not have full knowledge of what they’ve been through.

“My worry is that patients survive and they’re just let free in the world, with no explanation of what happened to them,” Lamas said.

Emerging evidence suggests that ventilators may not always be effective for COVID-19 patients, and that other less-invasive ways of assisting breathing could work better. If these findings are borne out, and fewer COVID-19 patients end up on ventilators, that will be good news for them — because in every other respect, things are stacked against them.

COVID-19 patients tend to require an exceptionally long time on the ventilator — weeks instead of days — leading to more damage and slower recovery. The steps doctors take to mitigate harm to ICU patients, such as frequent awakenings and physical therapy, can’t happen as infection-control efforts limit the number of staff going in and out of the unit.

And the loved ones who comfort and orient the patient have to stay away, too.

Jon Graham was on a ventilator for nine days. He was photographed with his wife Tracy on April 17 at their home in Clinton.
Jon Graham was on a ventilator for nine days. He was photographed with his wife Tracy on April 17 at their home in Clinton.CRAIG F. WALKER/GLOBE STAFF/THE BOSTON GLOBE

When Jon Graham, who contracted COVID-19 in early March, awoke from nine days on the ventilator, his wife of 18 years was not at his side. He couldn’t understand where he was or what had happened to him.

Graham, a 62-year-old graphic designer, kept pulling out his IVs and the tube providing oxygen. The nurses at the University of Massachusetts Memorial Medical Center had to tie him down by the wrists.

“I’m in a room with alarms on it, doors locked, no human contact, nurses with hazmat suits looking in the little window,” he recalled two weeks later. “You’re really isolated by yourself. … It was awful, awful, awful.”

After a couple of days his mind cleared and the restraints were removed. But he realized he was too weak to even walk to the bathroom.

And while he seemed to know what was going on, he was also prone to delusions and paranoia, as often happens after prolonged sedation. He thought the doctors and his wife, Tracy, were plotting to keep him from coming home. He became convinced his hospital roommate had stolen a gift from a friend.

Even after Tracy confirmed that the friend never sent a gift, Graham said he’s not sure he believes it. The delusions seem so real, they are experienced as memories.

Graham returned home April 13. “I’m feeling a little bit better every day,” he said in an interview three days later. “At least I can stand up and walk around a little bit.”

His wife was surprised when Graham blew his top over an Internet issue. “Jon never gets angry,” she said. And he’s not reading like he used to, feeling too weary for the mental exertion.

Though grateful for the care he received at UMass and thrilled to be home in Clinton with his wife and their 7-year-old twins, he knows he’s got a long recovery ahead.

“I don’t feel confused or anything, but I definitely don’t feel like my normal self,” he said.

The doctor who took care of him at UMass, Adarsha Bajracharya, was optimistic that mentally Graham could return “near to baseline.” Graham hopes to go back to work eventually.

It’s a goal many ventilator survivors don’t achieve.

A ventilator at Boston Medical Center.
A ventilator at Boston Medical Center.ERIN CLARK/GLOBE STAFF

One study of 922 survivors of acute respiratory distress syndrome, the condition that typically leads to ventilator use, found that nearly half were jobless a year after recovery.

Dr. Brad Butcher, director of the Critical Illness Recovery Center at the University of Pittsburgh Medical Center, said the focus on unemployment caused by pandemic-related shutdowns misses another key aspect: Many COVID-19 survivors will be unable to return to work for some time, if ever.

“This is going to have a profound effect on people’s lives and the economy,” he said.

According to the most recent data, about half the 4.8 million people who survive a stay in the ICU develop some aspect of post-intensive care syndrome, said Tammy Eaton, a nurse practitioner who cofounded the Critical Illness Recovery Center with Butcher.

“That’s going to change pretty drastically with COVID-19,” as thousands of patients emerge from long, lonely ICU stays, Eaton said.

Only 30 percent to 40 percent of patients who survived a ventilator say they feel like they’re back to normal after three to six months, Butcher said.

Ventilator use affects thinking ability in ways that are not fully understood, but which may result from sedating medications or from loss of oxygen to the brain.

The cognitive effects can be hard to detect at first, especially in high-functioning, high-IQ people, said Dr. Carla Sevin, director of the ICU Recovery Center at Vanderbilt University Medical Center.

Sevin recalled having “a lovely conversation” with a man who seemed to be doing well after an ICU stay. But when a psychologist gave him a basic mental status exam — asking such questions as what year it is, who the president is — she was shocked to see that the man did not know the answers. “His wife was equally shocked,” Sevin said.

When these seemingly recovered patients return to work, they often end up having their duties reduced or getting fired, she said.

Stacey Salomon, a social worker in the medical intensive care unit at the Brigham, said even patients who don’t return to their previous lives “sometimes get back to a different place,” though it’s not always a bad one.

Having to rely on family members can strengthen family bonds, she said, and the struggle to get better often engenders compassion. “They’re never quite the same, but there can be a real sense of growth and they often want to give back to others,” she said.

Rainer, the former lawyer who couldn’t resume his work, can attest to that. About eight months after his ICU stay, he got connected with Lamas at the Brigham, and after reviewing his treatment with her, was finally able to make sense of his experiences. An MRI revealed damage to the parts of his brain involved in decision-making and judgment. “Knowing there was a physical reason for the difficulties I was having was helpful,” he said.

He ended up designing the website for Lamas’s “After the ICU” clinic. Today he teaches a business course for an online university and is working with his wife on starting a nonprofit. But he’s a high-powered lawyer no more. He sometimes nods off at 4 in the afternoon and sleeps through to the next day.

Through it all, Rainer has discovered a “weird side effect” of his ICU experience — happiness.

“I’m much happier than I used to be,” he said. “I laugh and I joke around and I don’t take things as seriously as I used to. I look forward to each day, even though I’m not going to get much done.”

NCCI Updates on Payrolls and Experience Mods – COVID-19

The National Council of Compensation Insurance (“NCCI”) has come out over the last few days with some important calls in regard to CoVid-19. 

Foremost, the NCCI is changing the class code for those that are still being paid and work from home, but under a different scope of employment.

Secondly, many States continue to revise their triggers for “presumptive coverage” for workers’ compensation.  In all States, first responders are considered to be covered on an occupational basis.  In others, the definition has been expanded to “health care workers”.  In others (ie Illinois), this definition has been expanded beyond first responders and health care workers to pretty much anyone that could be public-facing to include workers in restaurants, retail stores, grocery stores etc.

Lastly, the NCCI has decided that CoVid-19 claims should not be applied to experience modifications.  It is yet to be seen the 10 independent bureaus follow suit, but this is a big deal for those that are on guaranteed cost programs

Part 2 of our NAPEO CoVid-19 seminar on workers’ compensation with NAPEO is tomorrow at 2:30.  Hope to see you on the call —-

The below the latest from our friends at the NCCI –

Employers May Exclude Payroll to Employees Not Working for Workers’ Comp: NCCI

By | April 20, 2020

Businesses that have suspended operations due to COVID-19 but continue to pay employees who are at home but not working will not have to include the payroll paid to these employees in the calculation of their workers’ compensation premium.

The National Council on Compensation Insurance (NCCI) is preparing a reporting code that will be filed for approval by state regulators. The organization hopes to file it this week.

NCCI, the industry’s largest workers’ compensation data and rating organization, will file the change in the 36 states where it is the official rating bureau.

“We’ve had a meeting already with the insurance regulators telling them that it’s coming and sharing some information with them so that they’re ready for it and we hope that they’ll do a quick approval, Jeff Eddinger, senior division executive, Regulatory Business Management, for NCCI told Insurance Journal.

California’s rating bureau has already announced its own rule that this payroll paid during the shutdown will be excluded from reportable payroll. Other states with their own rating bureaus or monopolistic state funds are expected to follow suit.

Citing a desire for consistency across states, the North Carolina Rate Bureau told Insurance Journal it is waiting to see the NCCI rule change and will likely file that language for use in North Carolina.

The rule change is for payroll for people who can’t do their normal jobs from home, but are still getting paid. Without this rule change, that payroll would be included in calculating the employer’s workers’ comp premium. A workers’ comp premium is based on payroll.

“The rule change is going to basically take the payroll for that period of time where the worker’s furloughed and remove it from the calculation,” said Eddinger,

“You can make an argument that while they’re not doing their job, they don’t need workers’ comp coverage so the employers don’t need to pay the premium for that time.”

The trade-off is that a company that excludes an employee’s payroll can’t report any claims for that employee, Eddinger added.

The rule will be retroactive, most likely to March 1. How long the code will remain available will depend on how long shutdowns are in effect.

He said NCCI considered using an existing code for idle workers but determined a new rule would be better.

In another change, NCCI will also begin tracking COVID-19 related claims.

Eddinger does not think the payroll rule change will have a material impact on workers’ compensation carriers.

“It’s like hitting the pause button so you’re not charging premiums, but you also don’t expect any claims so in the end you think that it’s just going to be a wash,” he said.

It’s similar to the situation with auto insurers giving discounts on premiums for certain months, knowing that there will be less traffic and thus fewer claims.

Here is how NCCI’s explains the move on its website:

“NCCI recognizes that circumstances around COVID 19 are extraordinary and warrant an expedited rule change to address the question of payroll for employees who are being paid but are not working as it relates to the basis of premium. If approved, this rule change will be distinct from “idle time” under our current Basic Manual rules (Rule 2-F-1), and a corresponding statistical code 0012 will be created for reporting this payroll. This payroll will not be used in the calculation of premium.”

NCCI has a COVID Resource Center on its website that includes answers to frequently asked questions and a new analysis of the economics impact of coronavirus on the workers’ compensation industry.