The Continuing Impact of September 11 on Workers Compensation
December 2001
It's been over 90 days since the attacks,
and resulting WC payments are estimated to be over $4 billion. This article
updates how the various state and insurance regulators are responding.
by
Christine Fuge
IRMI
As time passes from the events of September 11, 2001, the insurers and regulators
responsible for the delivery of workers compensation insurance continue to find
themselves navigating in a new, uncharted, and unsettling landscape. With the
current estimate of people missing and presumed dead from the attacks at 3,325,
and estimated workers compensation payments in excess of $4 billion, insurers
and regulators have been scrambling to address the claims from the disaster
as well as casting forward to proactively prepare for the future.
This article updates how the various state and insurance regulators are currently
handling the crisis, from a workers compensation perspective.
Insurance Regulator Response
The New
York Workers Compensation Board where most of the claims are likely to be
filed, continues to lead the way in its handling of claims resulting from the
9/11 tragedy. Among the steps Governor George Pataki and the board have implemented
to facilitate claims of the injured and survivors of those killed are the acceptance
of affidavits in lieu of death certificates from the victims' next of kin and
the relaxation of the 30-day period for the injured employee or the employee's
survivors to report the injury or death to the employer.
As we reported in In the Aftermath of September 11,
2001—Workers Compensation, several other states and jurisdictions like—New
Jersey and the Federal Office of Workers Compensation—have set up special web
pages to address questions resulting from the events of September 11, 2001.
The Effect on Experience Rating
As the claims begin to come in, insurance regulators have now had to turn
their attention to how to deal with the statistical recording of these losses.
One of the areas of the workers compensation rating process that stands to be
heavily affected by the catastrophic nature of these losses is an insured's
experience rating calculation.
New York. Again, New York has the most employers
likely to have their experience rating influenced by these losses. The
New York Compensation
Insurance Rating Board (NYCIRB) has issued rulings defining these losses
and what their impact will be on experience rating. In its RC Bulletin 1989,
the NYCIRB defines the workers compensation claims resulting from the occurrences
of September 11, 2001, that are to be coded with the Catastrophe Number 48.
These include:
All claims directly arising from the commercial airline hijackings of
September 11, 2001, and the resulting subsequent events with accident dates
of September 11, 2001, through September 14, 2001.
The purpose for the 3-day window on the date of occurrence is an attempt
to include respiratory and mental stress claims that may result from the disaster.
Further, RC Bulletin 1990 states that the claims resulting from the September
11 attacks (Catastrophe Number 48) will not be included in the merit or experience
rating process of the employer who sustains these losses as their enormity is
not a true reflection of the employer's loss experience.
New Jersey. The
New Jersey Compensation
Rating and Inspection Bureau (NJCRIB) who serves New Jersey, another state
likely to have employers with experience affected by claims from this occurrence,
has issued Circular Letter 1649 in which it also adopts the use of the 3-day
claim window and Catastrophe Number 48 to identify workers compensation claims
resulting from the September 11 disaster. They have not, however, determined
whether or not these losses will be excluded from the experience rating of affected
New Jersey employers.
Pennsylvania. In a third state likely to be
influenced by the disaster, Pennsylvania, the
Pennsylvania Compensation Rating Bureau has also agreed to the 3-day window
occurrence date and the use of the catastrophic code number 48.
Texas. The
Texas Department
of Insurance responsible for the oversight of workers compensation rating
in Texas has also decided to use these same parameters for the reporting of
claims resulting from the events of September 11, 2001.
NCCI. The
National Council on Compensation Insurance (NCCI)—the licensed workers compensation
statistical agent for 34 other states—also made a decision as to how the claims
resulting from the events of September 11 will be handled as respects experience
rating. NCCI is also using the same 3-day date of occurrence window as New York
and has assigned these claims the same statistical catastrophic code number
48.
NCCI Circulars STAT-01-05 and 01-06 provide more detail on how these losses
are to be coded. Additionally, NCCI has determined that the losses "directly
attributable to the September 11 attacks" will be excluded from an employer's
experience rating calculation".
NCCI has also addressed the recent outbreak of anthrax cases and how these
bioterrorism claims will be dealt with statistically. They are not to be assigned
a separate catastrophe code. Their uniqueness will be addressed in the coding
the detail of the loss description. A decision has not been made whether these
losses will be included or excluded from an employer's experience rating.
Loss Cost Factors
Another area of workers compensation rating that can be significantly affected
by the losses resulting from the events of September 11 is the development of
loss cost factors for the various states affected by such losses. None of the
regulatory agencies involved have yet formulated how these losses will be handled
and whether they will be included or excluded from the experience used to promulgate
individual state loss cost factors.
Assessing the Impact of Future Terrorist Attacks
A final consequence of the September 11, 2001 attacks now beginning to manifest
is that individual states are assessing how their workers compensation law and
workers compensation system would address a similar attack. One state to particularly
note in this effort is Illinois.
Lawmakers in Illinois became concerned that the definitions of "injury" and
"occupational disease" contained in the workers compensation act were not broad
enough to provide coverage to Illinois employees should events similar to those
on September 11 occur in Illinois. The result is HB 3658 that is currently in
committee in the Illinois House.
The bill amends both the definition of "injury" and "disease" so that an
injury or disease is compensable when it results from the "conditions and obligations
of employment" that placed the employee in a position to be injured by a "neutral
force" that the employee would otherwise not have encountered. A "neutral force"
is defined in the bill as "a force that is neither personal to the employee
nor distinctly associated with the employment".
Conclusion
There are likely to be more workers compensation issues emerging in the aftermath
of September 11 as the organizations charged with the oversight and delivery
of the various workers compensation systems attempt to fully grasp a workers
compensation loss of this unprecedented magnitude. We will keep you posted.
Note: See other
terrorism articles on IRMI.com.
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