TN workers’ comp insurance rates to decline
Employers in Tennessee can expect workers’ compensation insurance premium rates to drop an average of 9.2% in 2021, according to state officials.
New workers’ compensation claims related to COVID-19 have not derailed a years-long trend of decreasing premiums in Tennessee and several other states, though the pandemic’s longterm effects on the workers’ compensation insurance industry are yet to be seen.
“During a year when Tennessee employers and employees have faced numerous challenges because of the COVID-19 pandemic, these reductions mean Tennessee employers may now have more money to invest back into their businesses and employees,” Tennessee Department of Commerce and Insurance (TDCI) Commissioner Carter Lawrence stated in a news release.
TDCI announced the cost decrease for new and renewal policies on Dec. 2. This marks the eighth consecutive year of decreasing workers’ compensation premiums in Tennessee, with a total reduction of more than 56% since 2014, according to state data.
Lawrence approved the decrease, which will go into effect on March 1, in November.
Workers’ compensation insurance provides payments to employees who are injured or fall ill on the job to help cover the costs of medical care, rehabilitation, lost wages during recovery and, in some cases, long-term compensation.
Because employers are responsible for paying premiums, the rate decrease will not have a direct impact on workers, who will continue to receive coverage for work-related illnesses and injuries, according to Insurance Information Institute spokesperson Mark Friedlander. The rate change does allow employers to reduce their overhead expenses for insurance.
The nationwide trend of rate reductions is due in large part to the decreasing number of workplace injuries, Friedlander said. So far, the pandemic has yet to change that.
“While there has been a large volume of COVID-19 claims, they’ve been largely offset by a drop in other workers’ compensation claims or traditional workplace injury claims, because so many people are working from home,” Friedlander said.
Covid-19-related first reports of injury (which may or may not turn into workers’ compensation claims) made up just 7% of the 60,840 reports Tennessee received from March 1 through Dec. 6.
The state logged 74,287 first reports of injury during the same time period in 2019, before the pandemic.
40% of COVID-19 workers’ comp claims denied in Tennessee
Businesses with five or more employees (or one employee for construction companies) are required to have workers’ compensation insurance in Tennessee, unless they meet exemptions.
COVID-19 presented a challenge to workers’ compensation insurance policies throughout the nation in 2021, as illness coverage varies by state. Tennessee lists “occupational diseases” as potentially covered injuries if they meet certain criteria. Eligibility is determined based on medical proof on a case-bycase basis in the Court of Workers’ Compensation Claims, and the burden is on the employee to prove that their job contributed more than 50% to the injury or illness, considering all other possible causes.
From March 1 through Dec. 6, Tennessee insurers denied 1,674 of the 4,156 total workers’ compensation claims associated with COVID-19 — just over 40%, according to state data.
Workers advocates say the current system presents multiple barriers for workers seeking compensation after they contract COVID-19, beginning with the need to show that COVID-19 qualifies as an “occupational disease.”
Workers typically navigate the system themselves, without the help of a lawyer.
At least 17 states issued orders or passed legislation to expand and clarify coverage of COVID-19, but a bill introduced in Tennessee in August was voted down by the Senate Commerce and Labor Committee 7-1.
Opponents voiced concerns that defining COVID-19 as an occupational disease and shifting the burden of proof to the employer in workplace outbreak situations would stifle the economy, overload the workers’ compensation system and cause significant premium increases for employers.
Premium rates are determined based on long-term trends over several years, so Covid-19-related claims could have an impact on future rates, though it’s unclear what that may be.
Marsh, a global insurance brokerage and risk management company, reported that 96% of Covid-19-related claims in the United States amount to $3,500 or less. Friedlander noted that this is less than the average cost of a non-coVID-19 claim.
The remaining 4% may cost hundreds or thousands of dollars, especially for those patients who require extended hospitalizations or intensive care unit stays, according to Marsh’s research. Some patients may require long-term care for complications of the virus, including kidney problems, and some individuals may take several weeks to regain their health.
The National Council on Compensation Insurance, which sets rates for 36 states including Tennessee, reported that about 2% of COVID-19 workers’ compensation cases result in some form of permanent disability.