Workers Compensation Issues

NCCI Provides Workers Compensation Research about COVID-19 Impact

Christine Fuge | May 8, 2020

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The National Council on Compensation Insurance (NCCI) has released a white paper, COVID-19 and Workers Compensation: Modeling Potential Impacts. The focus of the study is to provide some preliminary research about how the COVID-19 pandemic will affect workers compensation, particularly a recalibration of expected losses for 2020.

The executive summary along with detail in the white paper set up the assumptions and parameters of the research, including sources of the data used. The 38 jurisdictions (Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, Vermont, and West Virginia) for which NCCI provides ratemaking services to are the basis for the research. It is also noted that the model does not include the potential impact of factors such as permanent partial disability and permanent total disability benefit payments, mental injury claims, or possible employers liability claims at this time due to the unknown influence of these elements.

Impact to Expected Loss Scenarios

For illustrative purposes, the study offers four different scenarios as to how the COVID-19 outbreak can impact workers compensation expected losses for 2020. All four scenarios use the same assumptions.

  • There is a 100 percent compensable claim rate for all cases receiving medical services. Note that "Table 9: Overall WC Loss Impacts by Infection and Compensability Rate" provides different infection and compensability rates that the user can employ to adjust the calculation. The 10 percent infection rate utilized in the scenarios was randomly chosen from the forecast infection rates and is not more accurate than the other rates provided by Table 9.
  • All cases with mild symptoms are provided some medical services.
  • As already discussed, there is an assumption that there are no losses due to permanent partial disability, permanent total disability, and mental injury.

Hypothetical Scenario #1—Impact to Expected Losses

The first scenario reviews the potential impact of COVID-19 across all occupations for the 38 NCCI jurisdictions. Line 18 in the example shows the current expected losses of $37.2 million, while line 19 provides the recalculated losses based on the scenario of $68.7 million (an increase of 85 percent in expected losses as shown on Line 20). Note that "Table 9: Overall WC Loss Impacts by Infection and Compensability Rate" and "Table 10: Overall WC Loss Impacts by Infection and Fatal Rate" offer other outcomes when the assumptions for Scenario #1 remains unchanged except there is a change in infection rate, compensability rate, or fatal rate.

For example, increasing the infection rate to 20 percent and leaving the compensability rate at 100 percent creates an increase of 169 percent in expected losses per Table 9 or total expected losses of just over 100 million. Note that NCCI has also introduced an interactive tool that allows the user to plug in various values and see the impacts in all or specific NCCI jurisdictions.

Hypothetical Scenario #2—Alabama—Impact to Expected Losses

In the second scenario, the impact of COVID-19 on expected losses for all occupations in a specific jurisdiction is calculated. "Appendix 1: Scenario Inputs by State" in the NCCI discussion provides the jurisdiction-specific data by state and the District of Columbia. It is also suggested that the user consider factors that might impact the outcome of the results such as the compensability of the COVID-19 based on the statutes or pending legislation in the jurisdiction (these might influence the compensability rate chosen), the demographics and health of the jurisdiction (these could affect the report, hospitalization, critical care, and fatal rates selected), and the density of the population and what type of social distancing measures were implemented by the jurisdiction's government (these could aid in a determination of disease infection rate to use in the scenario).

Alabama was the jurisdiction chosen for this scenario. Exhibit 1 along with "Table 11: WC Loss Impact by State and Infection Rate Where Compensability Rate = 100%" can be utilized to create expected loss scenarios in any of the other 37 NCCI jurisdictions. The user can also develop alternate scenarios utilizing NCCI's interactive tool. Scenario #2, using the same assumptions from Scenario #1 but substituting factors and information specific to Alabama, produces a 68 percent increase in expected losses from $780.6 million to $1311.6 million due to COVID-19.

Hypothetical Scenario #3—Alabama—First Responders Impact to Expected Losses

Scenario #3 drills down into the potential impact of COVID-19 on expected losses for first responders in a specific jurisdiction. Again, Alabama is the chosen jurisdiction, but "Appendix 2: Scenario Inputs by State for First Responders" along with "Table 12: First Responder WC Loss Impacts by State and Infection Rate" can be used to estimate the change in expected losses due to COVID-19 in the other jurisdictions.

The NCCI interactive tool can also be used to perform this function. In this scenario, the impact of COVID-19 on expected losses specific to first responders in Alabama is an increase of 30 percent in expected losses from $24.6 million to $32.0 million.

Hypothetical Scenario #4— Alabama—Healthcare Workers Impact to Expected Losses

The impact of COVID-19 on expected losses for healthcare workers in a single jurisdiction is the subject of Scenario #4. Again, Alabama is the jurisdiction utilized. As with the other scenarios, factors in "Appendix 3: Scenario Inputs by State for Healthcare Workers" and "Table 13: Healthcare Workers WC Loss Impacts by State and Infection Rate" can be applied to forecast the difference between the original expected losses and the revised expected losses modified to figure in the influence of COVID-19 in other jurisdictions.

Again, the NCCI interactive tool can also be used to vary the factors in the scenario. Based upon the factors employed in this scenario involving Alabama, the revised expected losses are $111.2 million, up 102 percent from the original forecast of $55.1 million.


  • The information gathered through the research offers a wide range of outcomes based on the factors selected by the user.
  • COVID-19 will have a significant impact on 2020 accident year results. With so many variables in play, it is hard to know at this point with any certainty what this impact will be other than there will be one.
  • As more is known about the impact of COVID-19 on workers compensation, the loss predictive interactive tool provided by NCCI can be adjusted to reflect this information and provide a clearer picture of the ever-evolving loss landscape.
  • This research does not take into consideration some COVID-19 factors that might have a positive impact on 2020 losses. As an example, due to the COVID-19 shelter-in-place orders, there has been a significant uptick in teleworking. This includes individuals who normally worked in higher hazard classifications now performing clerical (class code 8810) tasks. These changes in exposures could result in reduced losses to offset in part the COVID-19 losses.

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