Author: WorkCompAcademy

For the first time in five years, credit rating downgrades for the U.S. property/casualty (P/C) industry outnumbered upgrades on a marginal basis in 2019, according to a new AM Best special report.

The Best’s Special Report, titled, “Rating Downgrades Outnumber Upgrades in 2019,” states that the number of downgrades rose by over 25% from the prior year, owing to a number of factors, including weather-related losses, challenging pricing in competitive lines of business and a rise in loss cost severity in several lines of business.

Despite a decline in upgrades and increased downgrade activity, numerous companies still showed improved risk-adjusted capitalization and positive operating performance, which supported higher rating levels.

Catastrophe activity declined markedly in 2019, which benefited the underwriting profitability of numerous lines of business, as well as risk-adjusted capitalization. Strengthened capitalization and upgrades also resulted from merger and acquisition activities, along with explicit parental support through either additional equity contributions or internal quota share agreements with parents.

Affirmations and upgrades accounted for 85% of all rating actions, reflecting the industry’s persistently strong capitalization, growing pricing sophistication, and positive operating results. However, some individual companies continue to face significant headwinds, including operating pressure from the reduced benefit of prior year reserve releases; weather-related events on property carriers concentrated in a single state; and increased severity affecting numerous lines of business.

The following are some other highlights from the report:

— The number of ratings placed under review in 2019 declined well below 2017 and 2018 levels. Under review actions in 2017 were affected by implementation of the updated Best’s Credit Rating Methodology (BCRM), while actions in 2018 were due primarily to heightened catastrophic weather activity;

— In the commercial lines segment, negative outlooks (22) continued to outnumber positive outlooks (21). Overall, 86.6% of the segment’s outlooks are stable, a slight increase when compared to the prior period. Although the segment certainly continues to face headwinds; and

— Of the total rating changes, 31 (4.0% of all rating changes) were assignments compared to 21 (2.8%) the prior year. The majority of assigned ratings were for commercial lines companies and covered entities writing various coverages, including workers’ compensation, commercial casualty, private passenger standard automobile and commercial automobile.

In 2019, upgrades decreased significantly from the prior year, although rating changes rose slightly – ratings on 137 rating units changed compared to 128 in 2018. As in prior years, affirmations, at 78.4%, were the most common rating action, slightly below the five-year average. The high percentage of affirmations reflects the overall stability of the U.S. P/C industry.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

The State Compensation Insurance Fund just announced that it is taking several steps to support its policyholders during the COVID-19 crisis.

State Fund has placed a moratorium on policy cancellations and late payment penalties.

It will also extend credit to any business negatively impacted by COVID-19 events and offer businesses the ability to adjust their payroll reporting.

Because the health and safety of California business owners, workers, and its own employees is its highest priority, State Fund is postponing all site visits.

State Fund has also executed a work-at-home program that is allowing the vast majority of its employees to work remotely–it remains open for business and ready to assist policyholders with all of their workers’ compensation needs.

“We’re adapting quickly to this new environment and doing what we need to do to protect our employees and our customers,” said State Fund President & CEO Vern Steiner. “We’ve been serving California for 106 years and we’re in a strong position to continuing doing so now and into the future.”

To ask questions, adjust payroll or request a credit extension, State Fund policyholders can call (888) 782-8338. For more information about State Fund, visit www.StateFundCA.com.

The Division of Workers’ Compensation (DWC) appreciates the efforts of the workers’ compensation community to provide care for injured workers during the COVID-19 pandemic. Of paramount importance is that everyone follow all guidance from the Governor as well as federal, state and local public health agencies regarding COVID-19.

After adherence to all public health guidance and orders, DWC encourages all parties to consider creative solutions appropriate to providing care to injured workers. The increased use of telehealth services for medical treatment may be appropriate.

The California Business and Professions Code section 2290.5 requires that – “the health care provider initiating the use of telehealth shall inform the patient about the use of telehealth and obtain verbal or written consent from the patient for the use of telehealth as an acceptable mode of delivering health care services and public health. The consent shall be documented.”

DWC is currently evaluating the feasibility of telemedicine for QME evaluations and will continue to do so.

The use of telemedicine for a QME evaluation may be appropriate where all parties agree that there is a medical issue in dispute which involves whether or not the injury is AOE/COE (Arising Out of Employment / Course of Employment), and all parties to the action, including the physician, agree to a telemedicine evaluation in order to resolve this dispute.

Although DWC is not authorizing any particular course of action, the division recognizes that in this time of medical emergency, creative delivery methods of essential medical treatment and evaluation services may be needed.

DWC realizes that QME appointments may be affected. When cancelling or rescheduling an appointment, please document the reason in the file and inform all parties as soon as possible. Given the current COVID-19 emergency, QMEs that cancel appointments fewer than 6 business days before an appointment may assert that they had good cause to do so.

The current state of emergency regarding the COVID-19 pandemic presents serious public health concerns, and parties and evaluators are encouraged to work together to take any action that may be necessary to protect the health of doctors, their staff and injured workers.

The QME examination scheduled for April 18, 2020 will be postponed. The exam will be rescheduled and a new date will be announced.

Upon a unanimous vote of its members, the Appeals Board just issued this en banc decision.

On March 4, 2020, the State of California’s Governor, Gavin Newsom, declared a state of emergency in response to the spread of the novel coronavirus (now known as COVID-19).3 As of the date of this decision, several counties in the State of California, within which district offices of the WCAB are located, have issued a shelter-in-place order in response to COVID-19.

In light of this state of emergency and pursuant to its authority per WCAB Rule 10370, the Appeals Board is temporarily suspending specific WCAB Rules of Practice and Procedure contained in Title 8 of the California Code of Regulations. (Cal. Code Regs., tit. 8, § 10370.) This suspension is applicable to all district offices in the State and applies to the following Rules:

— 1)Cal. Code Regs., tit. 8, former §§ 10562, 10563, 10563.1, now §§ 10755, 10756, 10888 (eff. Jan. 1, 2020): Dismissal of an application or lien claim for failure to appear is suspended.

— 2) Cal. Code Regs., tit. 8, former §§ 10860, 10865, 10866, now §§ 10961(a), 10962(c), 10990(f)(3)(E), 10995(c)(3) (eff. Jan. 1, 2020): Workers’ compensation judges (WCJs) and arbitrators shall have an unlimited extension of time within which to issue reports in response to petitions for reconsideration or removal.

— 3) Cal. Code Regs., tit. 8, former § 10408, now § 10500(b)(6) (eff. Jan. 1, 2020): Suspension of the requirement in the Compromise and Release agreements (DWC-CA forms 10214(c)- (e)) for signatures from two witnesses. Signatures on the forms from all parties may be electronic.

— 4) Cal. Code Regs., tit. 8, former § 10500, now § 10628 (eff. Jan. 1, 2020): Suspension of the requirement for service by the WCAB by mail. Service by the WCAB may be made electronically with or without parties’ consent.

On March 16, 2020, the Division of Workers’ Compensation (DWC) issued Newsline Release No. 2020-18 providing in pertinent part that the DWC’s district offices are currently closed for filing from March 17 through April 3.6 (See Code Civ. Proc., § 12(a); Cal. Code Regs., tit. 8, former §§ 10507, 10508, now §§ 10600, 10605 (eff. Jan. 1, 2020); Pa’u v. Department of Forestry, et al. (2019) (ADJ9159725, ADJ7757931, ADJ9640668). In accordance with this, all filing deadlines are extended to the next day when the district offices reopen for filing.

The Insurance Journal reports that workers’ compensation insurers in at least two states have decided that they will guarantee workers’ compensation benefits for health care workers and first responders.

Kentucky Employers Mutual Insurance Co. announced Friday that effective immediately it will pay wage-replacement benefits for any first responder or employee in the medical field who is quarantined because of direct exposure to a person diagnosed with COVID-19.

Ryan Worthern, communications director for KEMI, said the insurer’s staff decided to adopt the policy, but informed its board of directors and Gov. Andy Beshear of the decision.

KEMI’s announcement follows a decision March 5 by the Washington state Department of Labor and Industries to pay wage-loss and medical treatment expenses for any health care worker or first responder who is quarantined because of coronavirus exposure.

Washington operates a monopoly workers’ comp system, so that policy impacts every employee in the state who is covered by the state system.

L&I spokesman Tim Church said the department has already received several workers’ compensation claims due to coronavirus exposure, but he did not know if they were filed by medical or health care workers. Church said a quarantine normally would not be covered by workers’ comp unless the worker was made ill by workplace exposure.

Church said coronavirus claims by Washington workers outside of health care or emergency services will be decided on a case-by-case basis according to the state workers’ compensation statutes.

The National Council on Compensation Insurance, a rate advisory organization for most U.S. states, said last week that it remains to be seen whether other states will follow Washington state’s lead. NCCI said that many state workers’ comp statutes exclude “ordinary diseases of life” such as the common cold or flu.

However, NCCI said at least 10 states have issued mandates for coverage of coronavirus by health insurers. The directives vary, but include coverage for testing and visits to emergency rooms or urgent care facilities without deductibles or copays, NCCI said. “These measures, if expanded to more states, could have the impact of limiting claim activity in the WC market in those cases where only testing or quarantine are necessary,” NCCI said.

Two insurance carriers gave notice of their stand toward the coming workers’ comp claims in notices last week: Texas Mutual Insurance Co. and SAIF, Oregon’s state-chartered workers’ comp insurer, both issued bulletins that said they will decide whether coronavirus exposure is compensable on a case-by-case basis.

Texas Mutual added this caveat: “However, the more widespread COVID-19 becomes, the more difficult it may be for the employee to show that it is work related rather than an ordinary disease of life to which the general public is exposed.”