March 1, 2023, would have been the end of the COVID-19 emergency. I am assuming that California was the last state to remove the emergency.

James Moore

I was asked this question in an email last month. How long will the pandemic effect show up in workers' comp numbers?

So, policies — not just California-based ones — that became effective on March 1, 2023, would not have had the workers' comp pandemic effect attached to them. Let us count out the end of the effect.

I had written a few articles back in 2020 and 2021 in response to workers' comp pundits wanting to know the immediate pandemic effect numbers. My articles referred to the delayed workers' comp system, as insurance carriers do not report full policy numbers until the first UNIT STAT date, no matter the state.

Predictive analytics has changed the way carriers underwrite insured clients. Many underwriters are now looking back 10 years at workers' comp claim histories instead of the usual four.

Let us count out how that works in valued means claim valuations (total incurred):

• Valued 9/1/2024 (first UNIT STAT date); applies to 3/1/2025-3/1/2026 policy experience mod; still has two years of pandemic data.
• Valued again 9/1/2025 (second UNIT STAT date); applies to 3/1/2026-3/1/2027 policy experience mod; still has one year of pandemic data.
• Valued again 9/1/2026 (third UNIT STAT date); applies to 3/1/2027-3/1/2028 policy experience mod; none in this policy.

The March 1, 2027, policy would be the first policy year to not have any of the pandemic policy years included in the experience mods.

Just the numbers

Yes, the effect of the pandemic will linger for what could be decades. The X-mod system will still have the effect present for four more years. That is the way the numbers are structured for claims development.

I wanted to show how the experience mod numbers would be affected overall. This may generate questions. 

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.