Paduda: Long COVID Is Real. 'Social Inflation' Is Not.

Monday, August 21, 2023 | 0

The Workers Compensation Research Institute report on long COVID’s impact on work comp examined claims with an average of 18 months post-infection.

Joe Paduda

My takeaways include:

• One out of 19 COVID claims developed long COVID.
• Medical costs average less than $30,000.
• Temporary disability benefits run a bit above 20 weeks.
• Long COVID’s impact on workers’ comp is pretty minimal.

Risk and Insurance weighed in on “social inflation,” a not-well-defined term insurance folks use to characterize their not-very-well-founded belief that society is driving up casualty claim costs.

Very briefly, insurance execs complain that high jury awards to claimants are driving up insurance costs. However, there’s precious little real research supporting that view. 

This is from Ken Klein’s presentation to the National Association of Insurance Commissioners in 2022:

• There is no evidence of social inflation as an explanation of materially rising premiums or rising loss ratios.
• There is no evidence of any alleged social inflation factor causing insurers to incur new, unusual and materially higher, improper costs.
• There is no evidence of a social inflation crisis at all.
• It is not an indicia of the judicial or legislative system failing that defendants (or plaintiffs) are losing with a higher frequency than they expect. That is normal; all clients hope and expect to win. If the industry nonetheless is looking for explanations for losing more often and in larger amounts than it expects, then given that there is no evidence of an external cause, it perhaps is time for the industry to look inward.

What does this mean for you?

Stop catastrophizing until you can prove something exists. Start catastrophizing when the data is convincing. 

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.