Insurers Expected COVID-19 Workers’ Comp Surge; It Never Came
April 13, 2021
COVID-19 workers’ compensation claims have not been as widespread as insurers and ratings agencies around the country had predicted when the pandemic first started in early 2020.
Also, a large chunk of COVID-19 workers’ compensation claims filed by workers nationwide have been rejected, with insurers often citing lack of proof that the illness was contracted in the workplace.
The insurance industry was bracing for a deluge of workers’ comp claims when the seriousness of the pandemic became evident. This was especially true more as states passed laws requiring that essential workers be eligible for workers’ compensation benefits if they contracted the coronavirus. The laws introduced the presumption that if an essential worker came down with the disease, they had contracted it on the job.
Hundreds of thousands of COVID-19 claims were filed by workers around the country last year, but insurers were never overwhelmed. That’s because the number of other, more typical workers’ compensation claims tumbled dramatically as more employees were asked to work from home, while others were laid off in droves as plants shut down or business slowed.
With fewer people working on-site, the number of other workplace injuries and illnesses dwindled, experts say.
In the nine months ended Sept. 30, workers’ compensation payments and liabilities fell 7.6% from the same period of 2019, according to the National Council on Compensation Insurance (NCCI), which is the rate-making agency in more than 30 states.
As mentioned, a significant percentage of COVID-19 workers’ compensation claims have been rejected. For example:
- In California, which has a law that extends the presumption that a case was contracted at work for anybody working on-site, 26% of the 93,470 COVID-19 claims filed in 2020 were denied.
- In Texas, which has no presumption for COVID-19, 45% of the 32,000 related workers’ comp claims were denied, despite those workers testing positive.
- In Florida, which has given front-line workers who are state employees a presumption of eligibility, 22% of state employees’ coronavirus-related workers’ comp claims were denied last year, compared to 56% of cases for workers in the private sector. The NCCI also noted that fewer than 2% of COVID-19 workers’ compensation claims cost more than $10,000.
Payouts lower than expected
Another factor is that even COVID-19 claims that were accepted often did not end up costing the insurers as much as they expected to pay out because the majority of sick workers did not require any hospital stays or treatment. The percentage of workers requiring treatment was smaller than expected.
Insurers also say that many claims were likely never reported in the first place, particularly when workers had mild or no symptoms.
That’s backed by the NCCI, which recently issued a report showing that:
- 20% of COVID‐19 medical claims had an inpatient stay.
- Of those claimants with an inpatient stay, 19% were in an ICU for some portion of their time in hospital.
- The average length of inpatient stays for COVID‐19 medical claims was 7.5 days.
- The average cost per day was $5,400, totaling on average $38,500 per inpatient stay.
- COVID‐19 medical claims requiring an ICU visit tended to incur longer and more expensive inpatient stays, at 11.5 days and $67,300 per inpatient stay, respectively.