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.
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.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.
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.
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:
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.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.