Insights

COVID-19 Claims Trends Spotlight Update

Oliver Wyman and Marsh have undertaken an important project to assess and share the impact of the novel coronavirus pandemic on U.S. workers’ compensation losses. The COVID-19 Impact Study aggregates data from over one hundred organizations across numerous industries and geographies, with thousands of monthly claims to inform statistics on workers’ compensation losses. This information can help you confirm what you see anecdotally in your own experience and enable responsive loss forecasts during these uncertain times.

While the study with detailed results is only available to participants, below is a high-level summary to give you a sense of the valuable analysis that we can provide. If you would like to become a participant in this ongoing study and fully unlock the insights and data aggregated by Oliver Wyman actuaries, please fill out this form.

 

What effects do we see on workers’ compensation claims through June 30th 2020?

  • As expected, reported claim counts are down significantly across all industries, even those including businesses deemed “essential.”
    • Reported counts have been down between 13% and 26% since the start of COVID, with medical-only reported claim counts dropping as far as 39.5% in April 2020 over April 2019
    • Even healthcare industry claims counts dropped but by less than other industries
  • Closed claim counts were up year-over-year in the beginning of the COVID period but have been down year-over-year in the months of April through June
  • COVID-19 infection claims reached a peak of 22% of all reported claims in April. In this report we grouped COVID-19 infection claims by state groupings representing those with broad, limited and no COVID presumption laws/rules.
  • One of the most important findings in the data so far is that the ratio of indemnity claims to total claims is up significantly during the COVID months and this is putting upward pressure on loss costs that should be monitored closely. Pre-COVID, the average ratio of claims with indemnity to total claims was 21%. Post-COVID this ratio has increased to between 24% and 35%.
    • Note that indemnity claim counts were up between 1-12% in March and April 2020 over 2019, then were down between 11-16% in May and June. The largest decreases in reported counts stemmed from medical-only claims which were down between 19% and 39% since COVID began.
    • This shift is manifesting in incurred loss dollars in interesting ways:
      • The severity of indemnity and medical-only claims reported in the COVID-period have not changed significantly in the COVID period over prior months; however total claims severity is up due to the higher proportion of indemnity claims.
        • Due to this influence, incurred dollars since the start of COVID are not down to the degree that reported claims are.
        • While reported claims were down as much as 25% in May, incremental incurred losses had their biggest decrease of 13-17% in April and May.
        • Reported incurred losses have actually shown an increase of 22% in June, with all elements of loss – Indemnity, Medical and Expense – showing increases in June.
      • Trends in cause and body-part distributions aren’t as stark as we expected yet but there are indications of decreases in certain categories of “at work” types of claims such as Cut/Puncture/Lacerations, Fall/Slip/Trips and Machinery/Equipment. We expected an up-tick in cumulative injury claims which has not materialized yet, but we suspect that is due to slow reporting on these types of claims.

Keep in mind that this data from the second edition of the study released to participants in August 2020, only comprises about three-and-a-half months in a COVID-19/Shelter-in-Place type environment. Trends may shift or solidify over the coming months, as subsequent updates to our study will reveal. Oliver Wyman and Marsh created the COVID-19 Impact Study to help our clients navigate the turbulence caused by COVID-19 on their claims experience, and we intend to be partners working with them throughout the length of the entire process. The study will be updated monthly as claims are reported and settled.

We encourage any entity with U.S. workers’ compensation exposure to consider participating in this ongoing study. As a participant, you will have access to detailed metrics around claim frequency, severity, and duration and the distribution of claims by type.  All that is required from participants is submission of claims runs each month. All data will be strictly anonymized.