Expert Commentary

COVID Claims Development: Workers Compensation and Beyond

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.


Workers Compensation Issues
March 2021

Due to the amount of data provided in this webinar, this first article will cover COVID-19 claims data, and part two will provide more details on the long-term medical effects associated with these claims.

Our guests were the following.

  • Teresa Bartlett, MD—senior medical officer at Sedgwick
  • Max Koonce—chief claims officer at Sedgwick
  • Tim Stanger—vice president of partner relations at Safety National
  • Alex Swedlow—president of California Workers' Compensation Institute (CWCI)

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, independent bureaus, monopolistic jurisdictions, and self-insured employers. The CWCI and the Workers' Compensation Research Institute also provide analyses around workers compensation data.

To fill in some of the major gaps in data, panelists from the CWCI, Sedgwick, and Safety National broke 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 the following.

  • Infection rate
  • Symptom/asymptomatic rates
  • Hospital admissions
  • Intensive care admissions
  • Mortality rate
  • Cost per claim

Early projections related to COVID-19 claims were skewed based on a lack of stability in data modelling. 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 United States held a disproportionately large percentage of worldwide infection rates and deaths.

California alone currently accounts for 12.6 percent of US infections and 9.6 percent of US deaths. When studying workers age 18–65 in California, they account for 78 percent of the state's infections and 26 percent of the deaths. However, when looking at the number of workers compensation claims in the state, only 4.7 percent of infections and 5.6 percent 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 percent 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 percent, with almost 20 percent 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 healthcare industry share of claims dropped around 10 percent, accounting for around 29 percent 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 percent 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 percent of Safety National's accounts consist of three industries: public entities, healthcare 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 percent in 2020 compared to 2019, excluding COVID-19 claims. When including COVID-19 claims, the drop is around 10 percent. 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 percent 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.

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

Among the COVID-19 claims with an incurred cost of over $100,000, 15 percent 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 percent of their business being in the retail sector. Like the rest of the industry, Sedgwick's claims also saw a high volume during the three peaks of infection rates. Although health care only represents 11 percent of all of their accounts, most COVID-19 claims were reported from that sector, accounting for just over 50 percent 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 the following.

  • Cases that only required quarantine
  • Cases that required nominal medical treatment
  • Complex moderate cases
  • Complex severe cases requiring admittance in an intensive care unit (ICU)
  • Fatalities

These severity groupings have closely trended with original predictions, with fatalities, for example, accounting for just over 0.5 percent of all claims. Approximately 1.5 percent are severe cases involving ICU stays, 8 percent are moderate cases involving several medical treatment visits, and 90 percent are mild cases involving very little medical treatment. When reviewing these claims' value, 73 percent are valued under $5,000, and 85 percent 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 healthcare industry is accounting for a higher rate of hospitalizations than the other industries, trending 3-4 percent 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 our complete "COVID Claims Development: Workers' Compensation and Beyond" webinar and view a full list of FAQs from this session, please visit https://www.outfrontideas.com/.

Follow @outfrontideas on Twitter and Out Front Ideas with Kimberly and Mark on LinkedIn for more information about upcoming events and webinars.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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