COVID-19 requires companies with self-insured or high-deductible programs to take a new look at their operations, which may vastly reshape their risk profiles. The degree to which risk managers can come to new understandings of their changing exposure levels could have significant effects on current and future liability estimates.
Estimating outstanding claim liabilities for a self-insured or large deductible program depends heavily on the exposure levels for the present and recent past. A change in operations alters a company’s risk profile and can have a significant impact on reserving and loss projections for the next quarter or year. The larger the change in operations, the greater the impact on a company’s exposures and claim reserves.
In today’s climate, it is extremely important to make sure exposure estimates reflect the latest information available and that any changes in operations have been clearly communicated. Likewise, when life returns to normal, it will be important to frequently monitor the resulting increases in exposure levels.