COVID-19 People Risk key coverages and claims considerations
As COVID-19 continues to impact and interrupt businesses at an unprecedented rate, it is paramount that employers are continually reviewing their People Risk exposures and risk profile, in conjunction with assessing how their insurance coverages may be impacted.
Whilst generally there are no explicit COVID-19 exclusions under the key people risk insurance classes, the current circumstance has unearthed complexities around how some of the coverages may respond and whether a claim is deemed compensable. We have also seen a shift in insurer risk appetite when assessing new applications.
We outline below some of the key issues and insurer positions presently impacting employers across Australia in light of the current pandemic.
(The stance taken by insurers is varied and is likely to continue to evolve. The majority of this update is accurate as of 1//04/2020, with the Group Life section partially updated on 6/04/2020. Contact your broker to stay informed in this dynamic environment.)
Group Life (includes salary continuance, death and total permanent and disability)
As the pandemic evolves and the potential impact on certain industries and the economy emerges, insurers are moving quickly to assess the impact that this may have on future claims experience, their risk appetite and premium rates, particularly for long-term cover (up to age 65 benefit period) given the impact that the lower interest rate environment has on reserves.
From an open claims perspective, provisions are being made by insurers to ensure they can continue to effectively manage claims in light of the social isolation restrictions and the load being placed on the medical system.
From an individual coverage perspective, no exclusions apply for pandemics. The only current restrictions relate to individual insurance applications (i.e. where an individual applies for cover above their default cover), where we are seeing insurance companies putting in place deferrals for employees who have been diagnosed with COVID-19 or where the individual travels to or has travelled to a country that has been categorised as a "do not travel" region. The application for cover would typically be deferred until the individual is in Australia and the self-isolation period has passed.
Employers who have, or are contemplating either standing down parts of their workforce, putting them on leave without pay or making temporary pay reductions, need to consider the potential implications on their Group Life and Salary Continuance insurance policies on a case-by-case consideration. It is important to engage with your broker to discuss the specific scenarios for your workforce in order to allow for negotiations with your insurer that result in meeting the needs of your organisation and employees.
If a person is admitted to a private or public hospital as a private patient, most treatment is likely to fall under the Lung and Chest category but may vary per circumstance. Therefore, an individual will need to discuss the pre-admission with their insurer and specialist prior to private hospitalisation to ensure:
- Their cover provides benefits for the medical reason/classification they are being hospitalised for;
- The hospital is a recognised hospital with their insurer, and gain financial consent for out of pocket costs – all of which are part of the recommended standard process for all private hospitalisations.
If otherwise admitted as a public patient within the public universal health system, all medical costs should be fully funded by Medicare. Marsh does not currently foresee any government restrictions to Medicare benefits for COVID-19 in the public sector.
International health (expatriate)
Coverage applies globally, with nil pandemic exclusions. Insurers have coverage limitations surrounding temporarily returned expats, whilst Australians have restrictions with Medicare and their expat benefits.
There are currently no exclusions, however some insurers may apply a pandemic exclusion at policy renewal.
With many varied policy wordings, there is confusion regarding medical and cancellation/loss of deposits claims. On the 24th of March, Australian Prime Minister Scott Morrison announced a ban on all overseas travel, with few exceptions. This is on top of the standing advice from the 18th of March to not travel overseas at this time. This decision supports cancellation claims. Australian airlines are offering credits for cancelled flights whilst accommodation chains have relaxed their usual cancellation terms.
It remains that employment has to be the main or significant contributing factor to the injury and/or illness for coverage to apply under workers' compensation.
Claims assessment criteria
When determining compensability of a claim for compensation relating to a diagnosis of COVID-19, insurers and claims agents review and determine entitlements based on specific criteria i.e. whether:
- The worker was in fact a “worker”
- An injury (diagnosis of COVID-19) has occurred
- The exposures to COVID-19 occurred in the work environment, and
- The work exposure was either the main or significant contributing factor to the COVID-19 diagnosis
Each claim lodged for COVID-19 will be considered on its own individual circumstances.
If confirmation is received that the exposure to COVID-19 occurred in the course of employment, whether at or away from the place of employment, it will then need to be determined whether employment was “a significant contributing factor” to the confirmed COVID-19 diagnosis in order for it to be deemed a “work-related” injury / illness.
Working from home injuries
If employees are working from home (either directed to by you as the employer, directed by other authorities) and an injury is sustained in the course of their employment, insurers and agents will review and determine entitlements based on specific criteria i.e. whether:
- The worker was in fact a “worker”
- An injury or illness has occurred
- The injury and or illness occurred in or, out of the course of employment, and
- Employment was the main or significant contributing factor to injury or illness
Workplace shutdown or employees under quarantine
When it comes to lost wages related to employees who are unable to attend work, regardless of whether the workplace was shutdown, or if an employee is required to be in quarantine whilst awaiting COVID-19 test results, workers’ compensation cover will only apply if there is an accepted claim for compensation.
If you would like more information, please contact your people risk consultant or account manager. Alternatively, you can email us at firstname.lastname@example.org
This is a general overview of the insurance covers. We recommend that you read your policy wording so you have an understanding of the specific policy terms, conditions and exclusions. This page and any recommendations, analysis, or advice provided by Marsh are not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Any statements legal matters are based solely on our experience as insurance brokers and risk consultants and are not to be relied upon as legal advice, for which you should consult your own professional advisors.