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 November 30th 2020?

  • As expected, reported claim counts were down YoY significantly during the first few months of COVID across all industries, even those including businesses deemed “essential” dipping to a low of -27.9% in April. The stand-out points are these:
    • Medical-only claims dropped precipitously in March through May and have remained lower YoY in every month since COVID started
    • Indemnity claim counts have actually increased YoY in every month April through July 2020, despite the overall downturn in reported claim counts
    • The industry with the most stark trends is - unsurprisingly – Healthcare, where claims counts were flat-to-down initially (in March, April and May) but then spiked significantly in June, July and August by 22.4%, 47.2% and 8.8%, respectively and are still up 1.6%, 1.2%, and 7.9% YoY in September, October, and November
    • Overall reported claims YTD are down 11.4%
  • Closed claim counts were up YoY in April and nearly flat in June but have been down in the months of May through November by between 2% and 9%. Closed counts YTD are nearly flat, to slightly down, excluding the high April data point. Otherwise closed counts YTD are up 2%.
  • COVID-19 infection claims as a proportion of total reported claims reached a peak of 16% of all reported claims in April and July with a spike again in November at 10%. The total proportion of COVID-19 infection claims YTD is 9%. COVID claims as a proportion of total reported claims is highest in states with presumption laws/rules that cover all employees and, notably, 29% of reported claims in July in these states were COVID infection claims. Interestingly, COVID claims as a proportion of total reported claims in states with presumption laws covering essential employees spiked in April at 31% but then has remained quite low since.
  • 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 20-21%. Since March 2020 this ratio has increased to between 22% and 30%, with November being the first month this ratio is nearly flat vs November 2019 ratios.
    • The presence of COVID claims is influencing this phenomenon. A finding so far is that many COVID infection claims are “indemnity only” and many at least involved a component of indemnity, given that infected workers must quarantine and are not able to return to work.
    • However, note that this trend exists even when excluding COVID-19 infection claims. Without COVID claims, the ratio has increased to as high as 27% in April. However, we also note that, excluding COVID claims, the ratio of indemnity claims to total appears to be normalizing somewhat in July through November.
    • Note that indemnity claim counts have been up YoY in April, June, and July. They were up 6.8% YoY in April 2020, then up 23% and 18% in June and July. Indemnity counts YTD are up 1.3%.
    • This shift is manifesting in incurred loss dollars in interesting ways:
      • Due to the indemnity influence, incurred dollars since the start of COVID are not down to the degree that reported claims are. Incremental incurred losses were down in March through May, up or flat in June through August and down again in September, up in October, and down in November
      • The severity of indemnity and medical-only claims reported in the COVID-period have not changed significantly over prior months, aside from a few spikes in indemnity severity in June and October; however total claims severity is up somewhat due to the higher proportion of indemnity claims. 2020 YTD indemnity and total severity are up 8% and 15% over 2019 respectively.
      • Reported Incurred” dollars – defined as loss incurred on claims reported in the month – are up YoY in June, July and September. Reported incurred dollars on Indemnity claims are up substantially since April, reaching a high of a 77% YoY increase in June. The YTD reported incurred dollars are up 2%.  
  • Changes in reported claim volume across different cause of injury and injury body part since COVID began are fairly similar across all types (generally down between 60-80%) except for COVID related causes and body parts, where increases are significant.
  • The average age of an open claim appears to have increased by approximately 2 months since the start of COVID.

Keep in mind that this data from the fifth edition of the study released to participants in January 2021, comprises about eight-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 have begun to 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