Key takeaways from the 2021 NCCI Annual Issues Symposium
Each year, the National Council on Compensation Insurance (NCCI), which gathers data, analyzes industry trends and legislation, and prepares insurance rate and loss cost recommendations for 38 jurisdictions, holds an Issues Symposium. The theme of this year's event was Stronger Together.
Key takeaways include:
- "COVID was not the claims event we thought it would be." Among private carriers and state funds in NCCI jurisdictions, there were 100 death claims. The industry spent $260 million in COVID-related incurred losses in 2020, on over 45,000 claims; 75% of claims were indemnity only. The costliest one percent of COVID-19 claims accounted for 60 percent of COVID-19 loss dollars and workers tended to be older than average working age and were more likely to have comorbidities or other complicating conditions. Over 95 percent of COVID claims were less than $10,000, with the average cost around $6,000.
- Healthcare workers, first responders, and other essential workers make up most COVID claims for 2020, representing 75% of claims in NCCI states. Among healthcare workers, those in nursing homes were most likely to file workers' compensation claims.
- Because of job losses and shrinking payrolls during the pandemic recession, net written premium dropped ten percent to $42 billion in 2020. However, private insurers posted a profitable calendar year combined ratio of 87, the fourth straight year with a combined ratio below 90 for workers' compensation insurance. The reserve position for private insurers remains strong, growing to a redundancy of $14 billion as of Year-End 2020.
- Excluding COVID-19 claims, claim frequency decreased seven percent in 2020. "Pandemic-related shutdowns and increased use of telecommuting are likely contributors to this larger-than-average decline."
- Average indemnity claim severity rose 3 percent to $25,400, a figure in line with recent trends.
- COVID-related job losses were concentrated among relatively low-wage earners, with almost 80% of losses occurring in service sectors including leisure and hospitality, retail trade, professional/business services, and education and health services, according to the data from NCCI and the U.S. Bureau of Labor Statistics.
- An outlier driven by COVID was an average wage increase of 7.4 percent. For workers who kept their jobs, wages rose about 3 percent, but the relatively high number of lower-wage layoffs added another 4.3 percent.
- An examination of the impact of COVID-19 on medical treatment revealed that utilization of emergency rooms by injured workers was not impacted by the pandemic. Also, the closing of many medical clinics did not have a dramatic impact on the treatment of injured workers largely due to the rise in telemedicine, which rose to 13 percent in the second quarter but fell to five percent in the third quarter. More striking, was the share of in-person evaluations - dropping from 77 percent to 69 percent from the first to the second quarter but rising to 73 percent in the third quarter.
- The time to treatment only slightly increased. While there were delays in some surgeries, researchers noted in some cases, longer wait times can produce better results. Cruciate ligament tears, Grade 1 rotator cuff tears, and mild-to-moderate Carpal Tunnel Syndrome are among injuries where longer wait times to surgery are not impactful. Postponing surgery to deal with comorbidities, such as uncontrolled hypertension, smoking, and diabetes, may be associated with better outcomes.
- More than 75 percent of escalating medical costs came from only four percent of open claims three years after injury. Studies of these complex escalating claims showed that "multiple medical conditions, notably anxiety and depression, and surgical complexities, such as adverse reactions to implants, are claim characteristics that historically contributed to cost escalation."
While conditions suggest that the workers' comp system is strong and resilient, NCCI experts noted issues of concern include the uncertainty of long COVID claims (early data showed a readmission rate six months after initial hospital discharge in the 10% to 15% range for workers who contracted COVID-19), how quickly the recovery will drive an increase in payrolls and workers' compensation premiums, the impact of presumptions, and the impact of vaccines.
NCCI Resources:
Highlights: Latest trends in Time to Treatment, Escalating Medical Costs