Old claims easier to settle amid crisis

Cash-strapped workers appear to be more willing to settle old claims during the coronavirus outbreak, which would help insurers and payers in their efforts to close legacy claims, experts say.

The slowdown in court processing and the economic downturn amid the pandemic has led to a slow but growing move to closing older workers compensation claims, according to experts who say a higher uptick in settlements is on the horizon. 

“What has become an unexpected development is a lot of claimants who said ‘no’ to settlements are coming forward and wanting to settle,” said Beth Dupre, Seattle-based managing director and claim consulting practice leader for Marsh LLC. “It opens the opportunity for us to do just that and at a generally decent cost.” 

Rich Lenkov, capital member and head of the workers compensation practice at Bryce Downey & Lenkov LLC in Chicago, said his firm is seeing a modest 10% decrease in settlement value across-the-board as a result of the pandemic.

“That said, many employers and carriers want to maintain their cash reserves during this uncertain economic environment and so are in no rush to pay on workers comp claims,” he added.

Marsh, meanwhile, released a white paper in April on how the industry could improve its financial outlook during and after the pandemic, pointing to “outstanding liabilities associated with aging inventories of open workers compensation claims” that could “significantly reduce the amount of working capital.”

Yet, Marsh maintains that “settling these claims proactively, however, can help employers improve their balance sheets given uncertainty about the post-COVID-19 economic environment,” the paper states. 

Marsh says that for each $1 of reserves set aside to close those claims, 72 cents is spent.