Workers compensation claims for COVID-19 last year were far less than the doomsday predictions made early in the pandemic, but experts are concerned that lingering symptoms and rebuttable presumptions in some states may negatively impact the industry going forward.
In November and December combined, the U.S. reported 11 million new COVID-19 cases, with insurers and ratings agencies seeing corresponding jumps in workers comp claims.
Matt Zender, Las Vegas-based senior vice president of workers compensation strategy for AmTrust Financial Services Inc., said comp claims in his book of business ticked up in the last two months of 2020.
California reported 15,000 claims filed in November and 32,000 in December — with year-end claims for those two months totaling nearly as many as filed in the other months combined since the start of the pandemic, according to data from the California Workers Compensation Institute. In September and October, CWCI reported fewer than 5,000 claims filed each month.
About one in six workers comp claims in California was attributed to COVID-19 in 2020, but just a small proportion of those claims required significant medical treatment or hospitalization, said Alex Swedlow, president of Oakland, California-based CWCI.
“At the beginning of the pandemic, the hypothetical scenarios and projections related to direct cost impact were quite grim,” Kim Haugaard, senior vice president of policyholder services at Austin-based Texas Mutual Insurance Co., wrote in an email. “The current impact has not been as bad as we anticipated that it could have been.”
COVID-19 claims represented only about 2% of all workers comp claims paid out by Texas Mutual by the end of the year, Mr. Haugaard said.
At AmTrust, the percentage of COVID-19 claims in the insurer’s workers comp book of business account for less than 5% of total incurred dollars, Mr. Zender said.
“For us, it has been low, mostly because the claims we have seen have not involved a high percentage of hospitalization,” he said, noting that indemnity “skews a little higher than we might expect, but a lot of those medical-only type claims just aren’t being reported,” unless the individual is receiving extensive medical treatment in a hospital.
The National Council on Compensation Insurance, which is just starting to study third-quarter industry data, also noted that COVID-19 claims had less medical activity than what it “would have seen under normal circumstances,” said Raji Chadarevian, director of medical regulation and informatics at Boca Raton, Florida-based NCCI.
Strictly looking at COVID-19 claims with medical treatments, NCCI saw fewer claims in the first half of the year than it expected, he said.
The ratings agency found that 20% of COVID-19 claims reported an inpatient hospital stay; of those, 19% required intensive care services. The cost of hospital stays for those claims averaged $38,500.
The ratings agency found that 20% of COVID-19 claims reported an inpatient hospital stay, with all but 1% of those claims requiring intensive care services; the cost of hospital stays for those claims averaged $38,500.
Some states were harder hit by coronavirus comp claims in the first half of the year than others, including Alaska, Colorado, Connecticut, Florida, and New Jersey, Mr. Chadarevian said.
AmTrust’s book has seen an increase in workers comp claims in states where COVID-19 presumptions of compensability have been codified, such as California, which accounted for a third of the insurer’s coronavirus comp claims, Mr. Zender said.
States that put into place few coronavirus restrictions also reported higher rates of comp claims, he said. He noted a fair number of claims from Florida, which may have “some relation to the state’s actions and how much they stayed open.”
Florida reported that it had accepted more than 29,000 COVID-19 medical and indemnity claims in 2020, paying out about $55.4 million according to a January report from the Florida Division of Workers Compensation.
Mr. Zender said the financial impact of lingering effects of COVID-19 on comp claims remains unknown.
“We’re just at the very beginning of trying to understand what the long-term ramifications of COVID might be to the respiratory systems, circulatory system,” Mr. Swedlow said. “It will be some time before we know what impact that will have on long-term workers comp claims with COVID.”
This article was first published in Business Insurance.