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Moore: Think Again About Those COVID-19 Numbers

By James Moore

Friday, August 14, 2020 | 264 | 0 | min read

Many prognosticators and the press have rushed to publish or make sense of any workers' comp COVID-19 numbers, including claim counts and rating information. 

James Moore

James Moore

Unless I missed something over the last 30 years, the numbers are like a green banana: If you are patient and wait for the green banana to ripen, it becomes palatable.   

The same can be said for the workers' comp COVID-19 numbers. They seem to be a little green presently. 

I have sat through many webinars on COVID-19 numbers. The conclusions were the same: We will have to wait and see, akin to the banana ripening. 

Sept. 1-2 bellwether 

Many articles appear on this website covering the timing of how claim values (total incurred) pegs to the experience modification factor. For self-insureds, the calendar is even more delayed for claims valuation by a loss development factor.  

Hang in there with me, as this can be boring, but it can save your company premiums or self-insured over-budgeting. We will make many assumptions; the timing concept is the key.

The earliest claims value appears in any type of workers' comp rating formula would occur on Sept. 2, 2020. Watch the term "earliest." it will become huge in a few sentences. 

The Unit STAT date — the day claims are reported to the rating bureaus — becomes important. Let us get started: 

  • Policy date March 2, 2019, to March 2, 2020.
  • Unit STAT Date is six months after the policy expiration.
  • Small assumption: On March 1, 2020, the workers' comp COVID-19 numbers were recognized by the departments of insurance, National Council on Compensation Insurance, Workers' Compensation Insurance Rating Bureau and the other rating bureaus.
  • Bummer: You have only one day of COVID reporting numbers recognized by the rating bureaus; think a teeny-weeny tiny amount.
  • Big time bummer: The teeny, tiny amount that could have been reported on only the March 2, 2020, claims would not even show up in your mod until your March 3, 2021 policy (but only one day of claims possible. Egad!).
  • Think green bananas, as most of the COVID-19 numbers would be in your next policy — March 2, 2022, to March 2, 2023. Wow, that late? (yes, that late). 

1/365th of the workers' comp COVID-19 numbers 

How much data will be available in 19 days? It's 1/365, and on Sept. 3, it's 2/365. Just move the numbers provided in the above list one day ahead. The effect of those numbers will not be starting until March 2, 2021.  

Bottom line: Watch the purveyors or prognosticators of information with such phrases as "the numbers are here," etc. They are not — unless you can get them from each employer or insurance carrier. Do not eat a green banana unless they are plantains.  

An honest opinion came this week from Dave Bellusci, executive vice president and chief actuary at the WCIRB. When asked about the workers' comp COVID-19 numbers with respect to rate setting, he said we do not really know right now. Thanks for your honesty, Dave.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.

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