Breaking down COVID’s impact on workers’ comp
COVID-19-related workers’ comp claims had an average cost of $7,800 per claim.
COVID-19 claims accounted for 11% of all workers’ comp claims reported in 2020, but were only associated with 3.5% of total workers’ comp incurred losses, according to a recent report that examined data from 45 states.
The gap between claims versus losses is present because of a large number of pandemic-related indemnity-only claims, which were relatively uncommon in workers’ comp before the pandemic. Indemnity-only claims, which accounted for 42% of all COVID-19-related losses, are typically less costly than typically workers’ comp claims that involve lost time benefits.
Additionally, indemnity-only claims related to COVID-19 were resolved quicker than non-pandemic-related indemnity claims. Further, the average cost of a COVID-19 workers’ comp claim was lower than that for a pandemic-associated claim, the COVD-19-related data revealed. On average, a workers’ comp claim related to COVID had a cost of $7,800.
The report was produced through a multi-bureau collaboration which included workers’ comp rating bureaus from California, Delaware, Minnesota, Michigan, North Carolina as well as the National Council on Compensation Insurance (NCCI).
Impact from recent waves
The report noted many uncertainties remain as the pandemic continues and questions remain around “long COVID” as well as new variants.
However, vaccine rollouts and mandatory use of personal protective equipment in workplaces are anticipated to significantly reduce infection rates among workers, according to the report. The NCCI reported early feedback suggests a vast decrease in the number of COVID-19-related workers’ comp claims in 2021 compared with the year prior.
“The timing and impact of the COVID-19 pandemic on the workers’ compensation system varied by state. Differences in presumptions of compensability, governmental closures, and the handling of the economy are some of the factors that have contributed to the observed differences across jurisdictions. Thus far, the workers’ comp system has responded well — remaining strong and resilient,” the report authors concluded.
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