What’s next for Workers Compensation when we emerge from COVID-19 lockdown? - COVID-19 Blog | Deloitte Australia has been saved
In our previous blog we considered the direct and indirect effects of COVID-19 on Workers’ Compensation schemes, claims managing agents, insurers and employers and how they respond to the crisis, focusing on employee safety and business continuity. In this article we look at what stakeholders in the Workers’ Compensation ecosystem will need to consider as focus shifts to the recovery phase.
As the Federal Government’s three stage approach to easing restrictions is implemented, organisations will start to shift from managing the crisis and keeping businesses functioning, to managing the transition to a new future working environment and business position.
As we consider the longer-term implications, there are different viewpoints on how and what plans should be put in place to be able to emerge from the pandemic in a strong position.
Managing this transition will be challenging. The past is looking less and less likely to be a good indicator of the future state. Many expect the ‘next normal’ to look significantly different to the pre-COVID-19 ‘normal’.
Our analysis and modelling forecast the possible pathway of the virus and the corresponding impacts on the economy and society. The Economic cases for resilient leaders considers two potential future states across epidemiology, society, technology, policy and environment and the corresponding economic implications as summarised in the diagram below.
While these economic cases are hypothetical, they are useful to frame planning given the considerable uncertainty about how we will emerge from this crisis.
As we begin to emerge from the crisis we explore some considerations for the workers’ compensation ecosystem under the two possible future states:
Area of workers compensation |
Mild future state |
Severe future state |
Impacts of claims costs |
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Return to work |
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Provision of treatment services |
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Mental health injuries |
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Premium pool impacts |
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Employer declared remuneration |
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Employer capacity to pay premiums |
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Scheme’s financial condition |
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With so much uncertainty the best way forward to ‘recover’ in a strong position is to examine the different possible future state scenarios and undertake the analysis to develop a series of possible outcomes for each of these states. This will inform planning, strategies to best address the evolving risks, and prioritisation to ensure that the most impactful risks are addressed first.
In our next blog we consider the issues from the perspective of organisations that self-insure their workers compensation liabilities.
Niki is a qualified actuary with experience that spans general insurance, injury schemes, health insurance, self-insurance and data analytics. She provides advice across a range of industries including thought leadership for strategy development work. Niki also advises insurers on liability valuations, pricing reviews and financial condition reporting. As an active member of the Actuaries Institute, Niki contributes to the Institute’s Anti-Discrimination Working Group and COVID-19 Workers Compensation Working Group.