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Impact of COVID-19 on Workers Compensation Insurance

Posted on 21 Feb 2021
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A workmen compensation insurance policy covers the liabilities of the employers towards their employees, arising due to work-related illness, injuries, or death. As per the Workmen’s Compensation Act of 1923, having a workmen compensation policy is mandatory for all manufacturing businesses in India with more than 20 employees.

Workers Compensation Insurance

Is COVID-19 covered under the Workmen Compensation Policy?

The answer to this question is “may be”. As per the policy terms, a workmen’s compensation insurance plan provides coverage against “occupational diseases and injuries”, that arises either due to the employment or during the employment. Many policies exclude ordinary life diseases such as cold and flu from the scope of coverage.

However, qualified employees or workers can claim for specified benefits if they contract COVID-19, provided that they can prove they contracted the coronavirus while at work. The benefits for which they can claim under the workmen’s compensation policy include wage loss benefits, medical benefits, and rehabilitation benefits.

Impact of COVID-19 on Workmen’s Compensation Insurance

Since the onset of the pandemic in early 2020, the economies of various industries across the globe have taken a hit and the insurance sector is no different. In fact, it is one of the most badly hit industries due to the ongoing situation as the number of claims began to spiral rapidly.

As the claims of COVID-19 exposure in the workplace began to outpace the decline in claims for other types of occupational diseases, the workmen’s compensation insurance providers started feeling the heat. However, the market still remains largely competitive. Let’s evaluate the impact of COVID-19 on workmen compensation insurance on the basis of 2 key parameters:

  • Impact on the number of claims

    As mentioned above, the number of COVID-19 claims vastly outpaced the claims for other occupations diseases during the past one year. However, as most of the workplaces remained under considerable restrictions with many of their employees working from home, the reduction in other types of claims balanced the scenario to an extent.

  • Impact on the premium amount

    The impact of the COVID-19 recession on the premiums has been a major reason of concern for the insurance industry. As the pandemic resulted in high unemployment rate and lower payrolls, the premium also started to fall for the insurers. However, with number of claims going up, they witnessed the lowest profit margin during this period.

The Final Word

Though the direct claims resulting from COVID-19 is expected to create a short-term negative impact on the insurance industry, it’s likely to balance up when we look at the larger picture. It’s anticipated that as the world starts to learn to live with the pandemic, the adverse effects on claims, exposures, premiums, and operations will start to decline.

  • Workmen’s Compensation Insurance Policy
  • Product Code: 4010
  • Product UIN: IRDAN115CP0017V01201920

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This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). (Workman Compensation, 4010 , IRDAN115CP0017V01201920)