COVID, Comp, Claims and Costs

Yesterday NCCI and several state bureaus and research organizations put on an excellent webinar on COVID’s’ impact on Workers’Compensation. The analysis covered 2020 data from 45 states. The full report is available here.

Quick takes

In 2020 about 80,000 COVID claims were accepted in the 45 states at an average cost of $7,800 per claim.

There’s a LOT of interstate variation, with COVID accounting for 1% of claims in Montana and 29% in Kentucky.  The high rate in KY was somewhat higher than rates in MN; in all other states except NJ COVID claims accounted around 15% or less of total claims. The high percentages appear to be due to presumption laws which were quite broad in Kentucky and Minnesota.

Median was 7.2%…

Aa a percentage of incurred loss, COVID accounted for about 1.7% of incurred losses in the median state. Again there was a wide range, from 0.2% (Alabama) to 12% (D.C.)

COVID claims are diabolically opposite from “regular” work comp claims in that 88% of COVID claims are lost time claims compared to about 2% for “regular” claims. COVID claims are also closing earlier than “regular” claims.

There were 13% fewer Non-COVID claims in 2020 than in 2019; recall there’s been a long-standing annual structural decline in claims of about 3.8%.

The net is non-COVID claims dropped three times more than expected…correlation is not causation, but in this case it’s darn close.

NCCI used polls for audience reaction; the first questions was how impactful COVID direct losses will be on the WC system moving forward.

The responses were puzzling at best.  Clearly COVID claims have NOT been costly – far from it. In 2020 COVID claims accounted for $630 million in incurred losses – just 1/50th of total incurred losses.

Yet almost half (!!!) of respondents said COVID direct losses would be at least moderately impactful.

That, dear reader, makes zero sense.

• The math alone doesn’t support that belief, and workers’ comp folks are supposed to get math.
• There hasn’t been any material change in presumption laws, so that can’t be it.
• But there’s been far too much Chicken Little-ing about COVID.

My guess is that Chicken Little-ing has somehow convinced many that something that a) will be transitory and b) hasn’t been costly and c) is getting ever loss costly to treat will somehow become a far bigger problem than it is.

What does this mean for you?

C’mon people. Stop with the catastrophizing.

So, one really cool thing about the webinar – almost all of the presenters were women. Gotta love that.