COVID claims development: Workers’ compensation & beyond

Part 1 of 2: A panel of experts analyzed workers' comp claims data to offer a clearer picture of COVID-19’s impact on the market.

A recent webinar looked at claims data from The California Workers’ Compensation Institute, Sedgwick and Safety National to provide a clearer picture of COVID-19’s impact on workers’ compensation. (Photo:  Rawpixel.com/Shutterstock)

Editor’s Note: This article will cover COVID-19 claims data provided during a recent Out Front Ideas webinar. Watch for part two of this series, publishing next week, which will provide more details on the long-term medical effects associated with these claims. 

The latest Out Front Ideas with Kimberly and Mark webinar brought together a panel of industry experts to explore current trends being seen in COVID-19 claims, as well as long-term medical complications and what risk managers should be monitoring in the future.

Our guests were:

One of the most significant challenges in analyzing workers’ compensation data is that a single data source that collects and analyzes all the data does not exist. Data is currently provided through multiple sources such as the National Council on Compensation Insurance (NCCI), independent bureaus, monopolistic jurisdictions and self-insured employers. The California Workers’ Compensation Institute (CWCI) and the Workers’ Compensation Research Institute (WCRI) also provide analyses around workers’ compensation data.

To fill in some of the major gaps in data, panelists from CWCI, Sedgwick and Safety National break down their individual data sources to provide a clearer picture of COVID-19’s impact on workers’ compensation.

CWCI claims data trends

In tracking the various components of COVID-19, CWCI has developed studies and on-demand webinars that cover the history of presumption laws, early adjudication decisions and how the industry leveraged telemedicine as a response to shelter in place initiatives. In addition, webinars are now available regarding legislation. When developing early COVID-19 models, essential elements were considered, including:

Early projections related to COVID-19 claims were skewed based on a lack of stability in data modeling. The earliest data contained areas like China, Iceland and Greenland with infection rates that were much different than other parts of the world. Once data became available regarding COVID-19 in the United States, it was clear that the U.S. held a disproportionately large percentage of worldwide infection rates and deaths.

California, alone, currently accounts for 12.6% of U.S. infections and 9.6% of U.S. deaths. When studying workers age 18-65 in California, they account for 78% of the state’s infections and 26% of the deaths. However, when looking at the number of workers’ compensation claims in the state, only 4.7% of infections and 5.6% of deaths have an accompanying claim.

As of January 2021, there have been about 123,674 COVID-19 workers’ compensation claims reported. Projections show about 143,432 claims expected through the end of January 2021. Reported claims from March 2020 to January 2021 show a 12% drop in all non-COVID-19-related claims. However, projections show by the end of January, the overall decrease in claims frequency will be around 4%, with almost 20% of all claims being COVID-19-related.

The occupational characteristics of COVID-19 claims have changed with the fall wave of the virus. From October 2020 to January 2021, the health care industry share of claims dropped around 10%, accounting for around 29% of all COVID-19 claims. First responders have seen minimal change over the year in terms of their percentage of the total claims. Claims for the transportation sector doubled in the fall, now accounting for 8% of COVID-19 claims. Skilled nursing facilities still share a significantly higher percentage of COVID-19 claims in health care.

Safety National claims data trends

As a leading provider of excess workers’ compensation for self-insured entities, around 50% of Safety National’s accounts consist of three industries: public entities, health care networks and education. Self-insured data is missing from bureau analysis, making Safety National’s data unique.

Consistent with CWCI’s data, overall workers compensation claims for Safety National clients dropped around 26% in 2020 compared to 2019, excluding COVID-19 claims. When including COVID-19 claims, the drop is around 10%. There were roughly three peaks throughout the waves of COVID-19, including early April, early July and early December, with the December peak being the highest number of claims seen all year.

By age, the 20-55 bracket accounted for 84% of Safety National claims, with the average claim cost being $4,300. When looking at workers over age 55, the average claim cost was more than 3 times higher at just under $15,000.

63% of death claims were age 56 or older, 43% were between the ages of 56 to 66. 61% of deaths were male. 51% of death claims were in health care, and 22% were from municipalities (mostly first responders).

Among the COVID-19 claims with an incurred cost of over $100,000, 15% have incurred greater than $1 million. Some claims have over $2 million incurred, including organ transplants, long intensive care stays and even paraplegia caused by renal failure.

Sedgwick claims data trends

Sedgwick also carries many self-insured accounts, with 24% of their business being in the retail sector. Like the rest of the industry, Sedgwick’s claims also saw high volume during the three peaks of infection rates. Although health care only represents 11% of all of their accounts, most COVID-19 claims were reported from that sector, accounting for just over 50% of all reported COVID-19 claims. The retail industry and the public sector round out the top three industries reporting COVID-19 claims. The top five states reporting COVID-19 claims are California, Texas, Michigan, Florida, and Illinois.

When it comes to the severity of the claims, Sedgwick created a model to project where claims would fall, grouping claims into buckets including:

These severity groupings have closely trended with original predictions, with fatalities, for example, accounting for just over .5% of all claims. Approximately 1.5% are severe cases involving ICU stays, 8% are moderate cases involving several medical treatment visits, and 90% are mild cases involving very little medical treatment. When reviewing these claims’ value, 73% are valued under $5,000, and 85% are valued under $10,000.

There has been a fairly even distribution of claims among the age groups due to various industries’ claims. However, the more severe claims that include ICU stays are trending in the over 60 age group. The health care industry is accounting for a higher rate of hospitalizations than the other industries, trending 3-4% higher than the rest.

Overall, Sedgwick saw a decrease in overall workers’ compensation and liability claims across the country due to economic shutdowns and various employers not operating at full capacity. Even retail clients deemed essential saw a decrease in overall claims, which could be due to a lower customer count within the stores and an overall increase in safety measures. There has been a slight increase in work from home claims due to ergonomic-related issues.

To listen to the archive of the complete COVID Claims Development: Workers’ Compensation & Beyond webinar and view a full list of FAQs from this session, please visit https://www.outfrontideas.com/.

Kimberly George (kimberly.george@sedgwick.com) is the senior vice president of corporate development, M&A and health care at Sedgwick. Mark Walls (mark.walls@safetynational.com) is vice president of communications & strategic analysis at Safety National. Together they host the “Out Front Ideas” educational series. Follow @outfrontideas on Twitter and Out Front Ideas with Kimberly and Mark on LinkedIn for more information about upcoming events and webinars.

The opinions expressed here are the authors’ own.

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