Tag Archives: covid

Claims Development for COVID (Part 1)

The latest Out Front Ideas With Kimberly and Mark webinar brought together a panel of industry experts to explore current trends being seen in COVID-19 claims, as well as long-term medical complications and what risk managers should be monitoring in the future. 

Our guests were:

  • Teresa Bartlett, MD – senior medical officer, Sedgwick
  • Max Koonce – chief claims officer, Sedgwick
  • Tim Stanger – vice president – partner relations, Safety National
  • Alex Swedlow – president, California Workers’ Compensation Institute

One of the most significant challenges in analyzing workers’ compensation data is that a single data source that collects and analyzes all the data does not exist. Data is currently provided through multiple sources such as the National Council on Compensation Insurance (NCCI), independent bureaus, monopolistic jurisdictions and self-insured employers. The California Workers’ Compensation Institute (CWCI) and the Workers’ Compensation Research Institute (WCRI) also provide analyses around workers’ compensation data.

To fill in some of the major gaps in data, panelists from CWCI, Sedgwick and Safety National break down their individual data sources to provide a clearer picture of COVID-19’s impact on workers’ compensation.

CWCI Claims’ Data Trends

In tracking the various components of COVID-19, CWCI has developed studies and on-demand webinars that cover the history of presumption laws, early adjudication decisions and how the industry leveraged telemedicine as a response to shelter-in-place initiatives. In addition, webinars are now available regarding legislation. When developing early COVID-19 models, essential elements were considered, including:

  • Infection rate
  • Symptomatic/asymptomatic rates
  • Hospital admissions
  • Intensive care admissions
  • Mortality rate
  • Cost per claim

Early projections related to COVID-19 claims were skewed based on a lack of stability in data modeling. The earliest data contained areas like China, Iceland and Greenland, with infection rates that were much different than other parts of the world. Once data became available regarding COVID-19 in the U.S., it was clear that the U.S. held a disproportionately large percentage of worldwide infection rates and deaths. 

California alone currently accounts for 13% of U.S. infections and 9.6% of U.S. deaths. When studying workers ages 18 to 65 in California, they account for 78% of the state’s infections and 26% of the deaths. However, when looking at the number of workers’ compensation claims in the state, only 4.7% of infections and 5.6% of deaths have an accompanying claim.

As of January 2021, there have been 123,674 COVID-19 workers’ compensation claims reported. Projections show about 143,432 claims expected through the end of January 2021. Reported claims from March 2020 to January 2021 show a 12% drop in all non-COVID-19-related claims. However, projections show that by the end of January the overall decrease in claims frequency will be around 4%, with almost 20% of all claims being COVID-19-related.

See also: 9 Months on: COVID and Workers’ Comp

The occupational characteristics of COVID-19 claims have changed with the fall wave of the virus. From October 2020 to January 2021, the healthcare industry share of claims dropped around 10%, accounting for around 29% of all COVID-19 claims. First responders have seen minimal change over the year in terms of their percentage of the total claims. Claims for the transportation sector doubled in the fall, now accounting for 8% of COVID-19 claims. Skilled nursing facilities still share a significantly higher percentage of COVID-19 claims in health care. 

Safety National Claims’ Data Trends

As a leading provider of excess workers’ compensation for self-insured entities, Safety National has seen that around 50% of its accounts consist of three industries: public entities, health care networks and education. Self-insured data is missing from bureau analysis, making Safety National’s data unique.

Consistent with CWCI’s data, overall workers compensation claims for Safety National clients dropped around 26% in 2020 compared with 2019, excluding COVID-19 claims. When including COVID-19 claims, the drop is around 10%. There were roughly three peaks throughout the waves of COVID-19, including early April, early July and early December, with the December peak being the highest number of claims seen all year. 

By age, the 20-55 bracket accounted for 84% of Safety National claims, with the average claim cost being $4,300. When looking at workers over age 55, the average claim cost was more than three times higher at just under $15,000. 

63% of death claims were age 56 or older, 43% were between the ages of 56 and 66. 61% of deaths were male. 51% of death claims were in healthcare, and 22% were from municipalities (mostly first responders).

Among the COVID-19 claims with an incurred cost of over $100,000, 15% have incurred more than $1 million. Some claims have over $2 million incurred, including organ transplants, long intensive care stays and even paraplegia caused by renal failure. 

Sedgwick Claims’ Data Trends 

Sedgwick also carries many self-insured accounts, with 24% of its business being in the retail sector. Like the rest of the industry, Sedgwick’s claims also saw high volume during the three peaks of infection rates. Although healthcare only represents 11% of all of the company’s accounts, most COVID-19 claims were reported from that sector, accounting for just over 50% of all reported COVID-19 claims. The retail industry and the public sector round out the top three industries reporting COVID-19 claims. The top five states reporting COVID-19 claims are California, Texas, Michigan, Florida and Illinois. 

When it comes to the severity of the claims, Sedgwick created a model to project where claims would fall, grouping claims into buckets, including:

  • Cases that only required quarantine 
  • Cases that required nominal medical treatment
  • Complex moderate cases 
  • Complex severe cases, requiring ICU
  • Fatalities

These severity groupings have closely trended with original predictions, with fatalities, for example, accounting for just over .5% of all claims. Approximately 1.5% are severe cases involving ICU stays, 8% are moderate cases involving several medical treatment visits and 90% are mild cases involving very little medical treatment. When reviewing these claims’ value, 73% are valued under $5,000, and 85% are valued under $10,000. 

See also: 20 Issues to Watch in 2021

There has been a fairly even distribution of claims among the age groups due to various industries’ claims. However, the more severe claims that include ICU stays are trending in the over-60 age group. The healthcare industry is accounting for a higher rate of hospitalizations than the other industries, trending 3% to 4% higher than the rest.

Overall, Sedgwick saw a decrease in workers’ compensation and liability claims across the country due to economic shutdowns and various employers not operating at full capacity. Even retail clients deemed essential saw a decrease in overall claims, which could be due to a lower customer count within the stores and an overall increase in safety measures. There has been a slight increase in work-from-home claims due to ergonomic-related issues.

To listen to the archive of our complete COVID Claims Development: Workers’ Compensation & Beyond webinar and view a full list of FAQs from this session, please visit https://www.outfrontideas.com/.Follow @outfrontideas on Twitter and Out Front Ideas With Kimberly and Mark on LinkedIn for more information about coming events and webinars.

COVID Challenges Facing Homeowners

According to Chubb’s 2020 Homeowners Risk Survey, American homeowners have been inescapably affected by the COVID-19 pandemic. This fourth annual survey, which measures homeowners’ attitudes and behavior toward property protection, not only looked at such topics as renovations and water damage, it also adopted a COVID-19 lens to understand what risks and challenges have affected homeowners. 

One-third of all homeowners have put off home maintenance due to COVID-19 concerns, and 45% say that COVID-19 has reduced contractors’ ability to address maintenance needs. Postponing necessary home maintenance can be a critical mistake, as letting small problems fester can lead to expensive repairs. Even so, despite not wanting contractors in their home, homeowners are not willing to tackle some important home protection matters themselves, including such measures as checking appliances hoses, inspecting home heating systems and conducting water heater maintenance.

In addition to understanding home maintenance concerns, the 2020 Chubb Homeowners’ Risk Survey also found that COVID-19 has challenged city-dwellers to consider moving to more suburban areas, along with an influx in interest of rental homes. 

For a copy of the full executive summary, click here. Key findings from the survey are identified below.

Property Risk During Quarantine

As we all continue to feel the pressures of COVID-19 while trying to stay safe and healthy, it’s possible that quieter home risks have taken a back seat. According to the 2020 survey, the top three risks that homeowners are most concerned about are the day-to-day upkeep of their homes (60%), maintaining their home value (45%) and weather-related water damage (38%). With just 38% of homeowners showing concern about external or weather-related water damage in 2020, the survey shows a significant dip from the 2019 survey – which reported 75% of homeowners concerned about external or weather-related water damage. 

Homeowner awareness of weather-related water damage is important, as they will likely be better prepared to protect their property from increasingly aggressive and frequent storms. However, it remains equally important for homeowners to remain vigilant against interior water leaks. In fact, interior water damage is more common and costly than homeowners may think. And during a time where individuals are spending their time indoors, homeowners may lose sight of the hidden threats of leaking pipes. Since the beginning of quarantine, 20% of homeowners have experienced some form of water damage; according to Chubb claims data, a single internal water leak now averages in excess of $50,000 in damage. Homeowners must remain keenly aware of potential water damage risks in their homes. 

See also: Accelerating Into 2021

Maintaining Home Improvement During COVID-19

Although COVID-19 has raised homeowners’ concern about contractors entering their homes, they are still not taking proper home protection measures into their own hands. According to the 2020 survey, no more than a third of homeowners employ home protection behaviors such as: periodically checking appliance hoses (19%), inspecting home heating systems (19%), conducting water heater maintenance (16%), shutting off water supply while on vacation (15%) and installing pipe insulation (12%). 

Additionally, less than half of homeowners (43%) have conducted home improvement projects, with only 17% of respondents bringing in a contractor and 26% relying on their own home improvement DIY skills. Furthermore, 12% of homeowners saw an issue, but with COVID-19 concerns did not bring a contractor inside their homes to address the problem. 

For homeowners who lack home repair skills or have home repairs that require a contractor, here are steps they can take to reduce risks in hiring home contractors during COVID-19:

  1. Ask your contractor if they have been experiencing any COVID-19 symptoms, if they’ve been in contact with anyone who has tested positive and what daily precautions they take when interacting with other customers.
  2. Request that the contractor wear a mask inside your home and ensure that everyone else within the home wears one, as well. While inside, open doors and turn on all lights to reduce the number of surfaces the contractor may touch.
  3. Consider using digital payment options. 
  4. Maintain at least six feet of social distancing when the contractor is working in your home.
  5. Fully disinfect any area in which the contractor has worked.

Finally, while not specific to COVID-19, it’s always important to request a certificate of insurance from your contractor prior to starting work in your home. 

Relocating Due to COVID-19

One of the trends that the U.S. has seen during the pandemic is a suburban flight at record numbers – perhaps as a result of prolonged time spent indoors. In the Chubb 2020 survey, results showed that 32% of homeowners in urban areas nationwide are considering moving out of their city.  

Homeowners under the age of 45 are most interested in relocating, as this age group is more likely to have younger children and may benefit from having extra square feet to balance remote work, learning and day-to-day life. 

As city-dwellers rush to relocate, property risks can be overlooked when making a purchase. For example, new suburban homeowners must be mindful of maintenance that may not have applied to their city home – such as the installation of sump pumps and the care of a septic tanks in areas outside of large cities.

Not only have home sales increased in suburban areas, outside of New York City, for example, but there has also been an influx in interest in rental homes. Whether it be a short- or long-term rental, people have been looking for an escape from the long quarantine inside their homes or apartments. However, along with any other aspect of homeownership, renting out one’s secondary home can come with risks. 

See also: COVID-19’s Once-in-a-Lifetime Opportunity

According to the study, 74% of respondents have not installed a water shut-off device, with a majority of the group reporting they have never even considered this device before. And many renters may not be familiar with the home’s plumbing systems and may not know where to turn off the water supply if a leak occurs. 

Although life may be on hold in many ways due to COVID-19, it’s important to remember that home protection is a constant challenge.

3 Trends That Defined 2020

As the New Year begins, the time for reflection has arrived. After a year that nobody could have predicted, I look to summarize three defining trends that developed last year and give my own prediction about the future of insurance as we begin the journey of 2021.

1. COVID-19 compelling the need for agility

Falling equity markets. Historically low interest rates. Shrinking new-business volumes. Reductions in consumer spending. The impact of COVID-19 within the insurance industry has been pronounced.

Insurers face a cacophony of challenges: new rivals, increased customer expectations, stalling transformation projects – the likes of which have been detailed extensively by market analysts.

However, the impact of COVID-19 was not in bringing these challenges into being but to cast them into the light: accelerating their impact and forcing insurers to re-prioritize their goals in unfavorable market conditions.

And, while many have articulated how we got here and why the challenges happened, few are commenting on what happens next, and the road back to pre-COVID rates of growth for the industry as a whole.

New Priorities

Insurers face a transformation crisis. Many long-term digital projects are stalling. While it is impractical to undertake a capital-expense-heavy program in the era of COVID-19, the demand for digital services continues to grow.

Insurers, therefore, are faced with a contradictory impasse. The solution? Reframing digital transformation as an iterative process as opposed to a one-off wholesale solution.

By undertaking small and agile projects, with a quick time-to-value and low cost, insurers can obtain the short-term benefits that drive growth and deliver agility with low risk.

Using this methodology, insurers can continue to innovate, digitize and build capabilities in applications, cloud or low-code solutions, while not over-committing to any specific long-term objective that could carry high risk due to the volatility of the market. 

2. The Continued Rise of Customer Experience

Customer experience is not a new concern. The adage, “the customer is always right,” has been a ubiquitous element of the business lexicon since the times of Harold Selfridge back in the early 1900s.

But, today, customers demand services that are personalized to their every need and prioritize simplicity and performance, so the importance of customer experience has grown. The realization that policy admin systems are not the most valuable systems insurers possess is starting to come to the fore.

In years past, the industry was built around policy. If you were traveling on holiday, you chose a policy that best satisfied your needs. If you bought a home, you chose a policy that provided the level of cover you wanted. If you drove a car, you chose a policy that matched your driving experience. And so on and so forth. The policy was at the center of the equation, and policy admin systems were created to maintain this status quo.

See also: Designing a Digital Insurance Ecosystem

Fast-forward to the modern day. Now the customer is king, and customers want their individual needs satisfied immediately, clearly, just in time, with a personalized service, and they want to only pay for the cover they need. That is a world away from selling a standard policy a million times over to people who might (or might not) need it, either in its entirety or all of the time.

In response to this shift, insurers are attempting to change the focus of the industry and gear it toward customers, but attempting to do this with a policy admin system is the equivalent of trying to fit square pegs in round holes: It simply does not work.

Round Pegs. Round Holes.

Insurers, today, must equip themselves with the right tools to provide an exemplary service. Policy admin systems that are focused on the creation of policy remain invaluable tools but only when used appropriately.

Instead of using a back-end system to provide a front-end service, insurers are realizing that they must focus on implementing two-speed architecture; the back end focused on policy, the front end focused on the customer and each designed to communicate with the other in an open-looped system.

Through this design, policy admin systems are put to use doing what they do best, while a more strategic, adaptable, omnichannel and personalized customer relationship management system can run in the foreground, delivering customers the content and experiences they want and driving up insurers’ satisfaction rates as a result.

3. The Unrelenting Pressure of Digital Disruption

“Disruption” and “innovation” are terms often used interchangeably, but the truth is that they have very different meanings.

Innovation, makes an existing approach better, whereas disruption transforms an existing approach into something new.

For the insurance industry, digital has rapidly moved to the disruption category.  

Digital disruption – or digitization – is having such a pronounced impact on the insurance industry that it is radically changing the very essence of what it means to be insured.

Traditionally, in the event the worst happened, insurance would reimburse you to the value of the wrong you experienced, at a cost to the insurer. It was a cause-and-effect relationship.   

However, via the process of embedding new technologies into their everyday operations, insurers are moving the needle away from reactionary tactics.

Using AI-driven technology and big data in real time to more closely monitor insurance products and predict and manage claims events before they even happen, insurers are no longer merely responding to when something goes wrong; they’re helping their customers avoid it.

From Reactive to Proactive

This disruption is having a pronounced impact on the industry as a whole – as a growing number of consumers demand this protection and insurance package.

Today, insurers understand that technology holds the key to delivering this differentiated value to their customers. But acknowledging new technologies and implementing new technologies are very different propositions.

While digitization is a foregone conclusion for insurers wishing to compete in the world of tomorrow, understanding how to deploy the right technology for the right purpose is no small feat. And those really willing to compete in this new dynamic must be prepared for significant change to the systems, processes and people within their business.

See also: How Will Strategies Change in 2021?

A Complex Equation

It is, perhaps, underwhelming to describe 2020 as memorable. The term era-defining might yet serve a more accurate purpose. For insurers, the year was unpredictable at best and unmanageable at worst; a string of disruptive and unforeseen events combining to create a pressure cooker of complexity.

Today, insurance stands on the precipice of profound change, and this piece has articulated a handful of the defining trends that brought us here. But as we look to the future of the industry, my prediction is that customer experience will become the single greatest definer of success, and those insurers that best find the balance between policy and customer will reap the rewards.

To learn more, check out these insurance success stories.

COVID and Power of Personal Connections

We are at a moment in history when businesses in all sectors are rapidly reworking how they interact with customers, to see how they can remain a valuable part of people’s lives as so much is changing. The pandemic has accelerated these changes, of course. In its massive disruption of daily life, shaking people and societies out of familiar routines and forcing new ways of pursuing their professional and personal interests, COVID-19 has created a new space for changes in behavior.

The insurance industry — long known for offering peace of mind, stability and trust — is adapting. In fact, the insurance industry is expected to spend nearly $28 billion annually on customer experience solutions. But many people still lack trust in insurers. Fewer than half of those surveyed in EIS Group’s Customer Compass Report say they trust insurers to respond to their basic needs. That is troubling and should be a wake-up call.

Now is the time for insurers to check their headings and set new courses to gain the trust and satisfaction of customers. To start, insurance companies must focus on adjusting two major components found throughout the customer journey — customer experience and personalization.

Customer experience and personalization — which have been predominant concerns in retail for some years — are now only second and third to price when it comes to main reasons why people might switch insurers, according to the Customer Compass Report. A full 28% of policyholders stated that poor customer experience is a “main reason” for leaving a provider, and 20% cited lack of personalization. Getting experience and personalization right is no longer a “nice to have” for insurance providers; it is quickly becoming a crucial element of what insurers offer to customers.

As the world becomes increasingly digitized, opportunities abound. Fitness trackers, for instance, help their users with real-time insight into their health and activity — but the same data can be fed into a health or life insurance product to provide personal rewards and discounts. A few insurers, including John Hancock with its Vitality program, have been successful with this model. Similar approaches are relevant for automotive insurance, rewarding users when they avoid risky activities or drive responsibly, while giving them options for more extensive insurance if that’s what is appropriate for their lifestyle and behavior. 54% of consumers indicated they would consider car insurance they would pay for only when they drive. 60% would consider car insurance that costs less if they drive at low-risk times of the day.

See also: How Insurers Are Making Connections

Customers can be offered multiple ways of communicating, including email, self-serve interfaces and automated chatbots as well as phone and instant messaging. However, consumers have astonishingly low expectations of insurers — only 23% expect insurers to integrate their experience across mobile, web and in-person channels.

For a truly satisfying customer experience, insurers need to ensure that customers can move seamlessly between those channels as they wish. As an example, a buyer might receive some initial information about an insurance offer via email, then use a messaging app to get further details in a conversation facilitated by a chatbot. A web form would then be pre-populated with the information from that chatbot conversation, and a quote sent. At the same time, a call center would be available where a representative can see an overview of progress, if the buyer has any final questions before completing the purchase. While this example may seem commonplace for many consumer buying cycles, it is not for insurance buyers.

One truth of the digital economy is that people are willing to research and assess which products are right for them. But they are also interested in simplicity and want a “one-stop shop” for products that meet their specific needs. With data and tech accelerating faster every day due to the pandemic, insurers must embrace the challenge and seek all the potential opportunities that can improve customers’ lives.

COVID-19 Is No Black Swan

Many commentators have labeled COVID-19 a black swan event. Nassim Taleb popularized the expression, defining such an event as impossible to predict, having a major effect and seeming obvious in hindsight.

Yet, there were clear warnings from credible institutions. Three examples stand out, showing the crisis should not have been a complete surprise.

Epidemiologists had warned in the 2019 Global Preparedness Monitoring Board report that the chances of a global pandemic were growing and that the world was unprepared for a fast-moving, virulent respiratory pathogen pandemic.

The latest U.K. National Risk register identified pandemic influenza as a top high-impact, high-likelihood event.

Then, last October, the U.S.-based Center for Health Security organized an eerily prophetic pandemic simulation involving a coronavirus similar to COVID-19.

Can we still call COVID-19 a black swan when all those warnings were missed?

If COVID-19 is no black swan

The grey rhino, a term coined by Michele Wucker, is a cross between black swans and elephants in the room. Contrary to the low-probability black swan, the grey rhino is a high-impact, high-probability event usually ignored for various reasons. Climate change is a typical example, which until recently was discounted by investors, policy makers, corporations and wider society.

The grey rhino theory has many attractions. Rather than focusing on hindsight, it asks whether we will do something about an obvious problem. The theory embraces the fact that many things that go wrong in business, policy and our personal lives are avoidable, if only we had paid enough attention. It recognizes that the issue is generally not a case of if but when

Your black swan may be someone else’s white swan

Having diverse, multi-disciplinary boards can ensure a less blinkered review of risks, especially if the organizational culture values the input of the Tenth Man (or Devil’s Advocate).

Groupthink allows statements such as “impossible to predict,” so a risk register review by external advisers is a good idea, bringing fresh perspectives. War-gaming and red-teaming are also useful techniques successfully imported from battlefield to boardroom.

The past informs our predictions of the future

An extensive historical review, going back to 1000 AD, underpins the taxonomy of threats behind the work of the Cambridge Centre for Risk Studies and its established Lloyd’s City Risk Index. Obviously, new threats (such as drones) need to be factored in.

Modeling allows us to go beyond the historical record. For climate change, general circulation models, in particular, are used to model the whole of the atmosphere and ocean system and are key in understanding how global warming is affecting the scale, intensity and frequency of extreme events like floods or tropical cyclones. Scenario planning is another useful technique to communicate the results of complex models to the public and decision makers.

See also: Risks Facing the Tokyo Olympics

The real black swans — the “unknown unknowns”

The best strategy to plan for these may be to maintain a constant state of preparedness, irrespective of the specific nature of the threat.

Increasing our threat-agnostic resilience could be a good investment, allowing citizens, corporations and governments to prepare for a national crisis without knowing exactly what the contingencies will be.

Recognizing that crises should be expected rather than the exception, robust business continuity plans are a sure way of improving resilience – designed properly, tested and updated regularly, they could prove versatile and may be your best insurance against the next black swan.

Learn to better spot grey rhinos

Grey rhinos are more common than black swans. Focusing on spotting them would promote a proactive rather than a fatalist approach to risk. A holistic approach to risk management and resilience is a good way of turning grey rhino risks into opportunities, and corporations can ask their chief risk officers to coordinate a cross-departmental approach. It should be cause for concern that most governments still do not have a national chief risk officer, alongside their chief medical officer and chief scientific officer.