In early 2020, COVID-19 seemed like a potentially significant and disruptive event for the workers compensation industry. NCCI responded by authoring its white paper, COVID-19 and Workers Compensation: Modeling Potential Impacts (PDF) and creating the COVID-19 Hypothetical Scenarios Tool to help the industry evaluate potential direct cost impacts the pandemic may have on WC losses.

Leveraging the COVID-19 claims data that has been reported to NCCI so far, can bring the ultimate impact that the pandemic may have on WC costs more into focus.

Key Takeaways:

– – NCCI has observed $260 million of case-incurred COVID-19 WC losses, excluding self-insureds, for Accident Year 2020 in jurisdictions where NCCI provides ratemaking services.
– – NCCI estimates that COVID-19 claims, excluding self-insureds, have the potential to ultimately result in WC losses exceeding $500 million over the entire duration of the pandemic across jurisdictions where NCCI provides ratemaking services. (NCCI provides ratemaking services in 38 jurisdictions.)

As of year-end 2020, private carriers and state funds reported 45,000 pandemic-related claims to NCCI associated with $260 million in case-incurred losses – an average COVID-19 cost per claim of approximately $6,000. Note: This claim count total reflects those claims with a reported payment or reserve (i.e., a loss or expense reserve).

Most of the reported COVID-19 claims to date have associated costs less than $1,500 and almost 95% have costs less than $10,000.

Further, while larger claims – those with losses greater than $100,000 – represent about 1% of all COVID-19 claims, they account for approximately 60% of reported COVID-19 losses to date. Claims in this category are generally more likely to remain open for extended periods of time, involve older workers, require inpatient hospitalization, and involve more complications due to the existence of comorbidities.

To date, nursing/convalescent home employees, other healthcare workers, and first responders have collectively accounted for more than 75% of all COVID-19 claims reported to NCCI. Other workers in the restaurant, building operations, distribution systems, and retail industries have collectively accounted for an additional 14% of reported COVID-19 claims.

Historically, medical-only claims (i.e., claims without an indemnity, lost-wage component) have accounted for almost 75% of all WC claims. Interestingly, this claim-type distribution reversed when we examined reported COVID-19 claims.

Of all the reported pandemic-related claims with a payment or loss reserve, almost 75% have an indemnity component, while only 25% are medical-only.