Dispatches from the Front
Jun 11, 2020

So, what's really going on in COVID vs workers' comp? Military commanders often refer to "the fog of war" in discussing how difficult it can be to understand what's really going on across a large, complex battlefield. A new research survey by Joe Paduda is beginning to offer a little clarity concerning the impact of COVID on comp claims. Obviously, it's early innings now but the news may not be as bad as some have feared. Another perspective comes from Gary Hagmueller of CLARA Analytics which also suggests that comp claims for 2020 may repeat patterns we've seen before.

Joe will be issuing a complete report in another week, but here are a few sneak peeks. The big headline is that, as of the survey date, the 35 payers (carriers and TPAs) surveyed had received some 33,000 COVID claims and accepted about 20%. The primary reason for non-acceptance thus far has been a lack of a solid COVID diagnosis. On the other hand, new, non-COVID claims have dropped by anywhere from 25 to 50%, depending on the book of business and industry concentration. The best guess for all of 2020 is an overall 20% drop in claim volumes. Thus far, the great majority of COVID claims are not budget busters. Only a few have involved ICU care or ventilators, for example. Oh, and the rate of usage for "tele-everything" services is through the roof.

The numbers from CLARA Analytics add some interesting details. Some 1800 COVID based claims had been filed in California as of late April. Many of these claims have been filed by healthcare workers and first responders - no surprise there. CLARA puts the rise in telemedicine services at 2000% - through the roof indeed! Comp experts surveyed by Hagmueller are predicting a rise in both fraud and litigation in the coming months as COVID claims become another part of how comp gets done. Hagmueller also notes that TPAs in particular are not standing still. The most aggressive administrators are reorganizing work teams, training, and procedures as well as reserve guidance to meet COVID claims head on.

Perhaps there is lemonade in this COVID lemon after all. Listen to Victor Hugo for a moment: "Emergencies have always been necessary to progress. It was darkness which produced the lamp. It was fog that produced the compass. It was hunger that drove us to exploration. And it took a depression to teach us the real value of a job." See below for another angle on the forced march of change


Ready for Parametrics?

Tracking insurance innovation used to be right up there with glacier watching for thrills, chills, and spills. Then a funny thing happened. The 21st Century has turned out to be an inhospitable place for the "we've always done it that way" mentality of old fashioned insurance. Let's take a look at the people's exhibit #1 - parametric insurance. While it's true that the first versions of parametric coverage were developed over 25 years ago in the form of the first true cat bonds, it's only recently that this new option for insuring awkward risks has started to become a standard tool in the risk management tool box.

The good folks at ITL have published a two part series on parametrics which will assist you on your way to instant expertise. Do you need to know this? Well, parametric instruments are often the best way to get cost effective coverage for the kind of risks most carriers are not too fond of. In fact, these instruments redefine the basic issue - how do you provide contingent funding for certain unusual types of hazards? Because a parametric plan does not require an insurance company, you can also draw on participation by hedge funds, banks, pension funds, and other sources of investment capital.

Here's a neat, in a nutshell, definition:


Traditional indemnity insurance, the kind we are all familiar with, pays out based on the cost of the loss incurred, as decided by your insurer and its loss adjuster. Parametric insurance pays out when a pre-defined event occurs and breaches a pre-agreed figure or index [the parameter].

The ITL series includes, as well as a description of the concept, a listing of some ten companies which are in the business of creating such programs*. Do you have some red-haired step children in your risk portfolio? No one in a hurry to invite them in? The parametrics approach may be well worth your inspection and consideration.

Yes, gentle reader, new things do happen, even in insurance. The action is not quite up there with the revolutions going on in astrophysics in 2020, your humble scribe's first career choice, but the rumble is real. Check it out.

*Note that this Journal does not endorse either the parametric concept or the service companies listed by ITL. This information is provided for your own evaluation.


Quick Take 1:
Phish, Smish, or Vish?

No, those are not the daily specials at an ethnic restaurant, but they are on the menu for any number of hackers. Most of us are familiar with phishing - social engineering by hackers via email to try to get your employees to reveal passwords and other vital information. The good folks at AmTrust Financial have published an update on the newest ways confidential information can be inveigled from your people and it's worth a quick review and perhaps a few bulletins to your colleagues.

While you may already think you know about phishing, do you know what are the most common email come-ons?

The three most clicked phsihing email subject lines: 26% Change of password required immediately, 1% deactivation of email in process, 13% password check required immediately.

Do all of your people know this? If not...

Smishing works much like phishing, but via your employee's smartphone and its SMS app, hence the name. The approach runs sort of like this:


You'll receive a call or text from someone claiming they are support technicians from a company such as Microsoft or Apple, offering to assist with a technical issue you are having. They will attempt to coax you into visiting a website so they "can take care of the problem for you."

Once you go to that website, it's all downhill.

Ah, but what's vishing, you ask? Vishing is another type of phishing attack that is carried out by phone and often targets users of Voice over Internet Protocol (VoIP) services with a pitch similar to the smishing con outlined above. Don't know if any parts of your company use VoiP? Here's a handy list of the major providers from PC Magazine. The point, which we have made before in these august pages, is that hackers are both ubiquitous and relentless. They probe every system your people use, looking for the proverbial weak link. Don't let your systems be phished, smished, or vished or your boss may be, well, you know.

A Dilbert cartoon



Quick Take 2:
The Liability Stick

COVID keeps getting more and more... er..., interesting. Nancy Grover, an ace reporter indeed, outlined in a recent Workerscompensation.com post the potential for COVID to create an employer liability nightmare. Starting with a recent post in Joe Paduda's Managed Care Matters, she moves on to pull in other views as well and provides a nicely rounded summary of the potential stalemate inherent in returning to normal versus maintaining strict anti-COVID safety.

If Employer's Liability is part of your charge as risk manager, you should probably read Nancy's piece carefully, as well as the sources she quotes. How serious is this? Well, consider the following: "Concerns about potentially significant liability prompted several insurance trade associations to join with the U.S. Chamber of Commerce and hundreds of additional organizations calling on Congress to pass legislation to protect them."

That meets the test for serious here at the GB Journal's World Headquarters.

a weather map

Don Giovanni makes his exit, assisted by the ghost of the Commendatore

*The Don had killed him in the first act - a bad move, it turns out.


Words to Remember

November 1, 1755: Dateline: Lisbon, Portugal

One of western history's most devastating natural disasters - a titanic earthquake followed by a massive tsunami - levels Lisbon. The king, Joseph I, who survived by a stroke of pure chance, is frantic with no idea what to do faced with unprecedented destruction. His First Minister, the clear-eyed Marques de Pombal, takes charge and tells the king: "first we bury the dead, then we feed the living."

Whatever the catastrophe, his advice still stands: don't try to outguess COVID, take care of your humans.

Lisbon, 11/01/1755: No exaggeration


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