COVID-19 and Workers Compensation - What We Know Now

In early 2020, COVID-19 seemed like a potentially significant and disruptive event for the workers compensation (WC) industry. NCCI responded by authoring its white paper, “COVID-19 and Workers Compensation: Modeling Potential Impacts (PDF)” and creating the COVID-19 Hypothetical Scenarios Tool to help the industry evaluate potential direct cost impacts the pandemic may have on WC losses.

If we leverage the COVID-19 claims data that has been reported to NCCI so far, we can bring the ultimate impact that the pandemic may have on WC costs more into focus.

Key Takeaways

  • NCCI has observed $260 million of case-incurred COVID-19 WC losses, excluding self-insureds, for Accident Year 2020 in jurisdictions where NCCI provides ratemaking services.1
  • NCCI estimates that COVID-19 claims, excluding self-insureds, have the potential to ultimately result in WC losses exceeding $500 million over the entire duration of the pandemic across jurisdictions where NCCI provides ratemaking services.

COVID-19 Claim Activity

As of year-end 2020, private carriers and state funds reported 45,000 pandemic-related claims to NCCI associated with $260 million in case-incurred losses—an average COVID-19 cost per claim of approximately $6,000. Note: This claim count total reflects those claims with a reported payment or reserve (i.e., a loss or expense reserve).

Relating these 45,000 claims to an estimated 56 million employees who are covered by private carriers and state funds in jurisdictions where NCCI provides ratemaking services, results in a COVID-19 claim frequency of approximately 8 claims per 10,000 workers. For comparison, historical non-COVID-19-related claim frequency values, including medical-only claims, have averaged more than 250 claims per 10,000 workers.2 The relatively low frequency of reported COVID-19 WC claims thus far, mitigates the impact the pandemic could otherwise have had on WC system costs for private carriers and state funds.

By Industry Sector

To date, nursing/convalescent home employees, other healthcare workers, and first responders have collectively accounted for more than 75% of all COVID-19 claims reported to NCCI. Other workers in the restaurant, building operations, distribution systems, and retail industries have collectively accounted for an additional 14% of reported COVID-19 claims.

By Claim Type

Historically, medical-only claims (i.e., claims without an indemnity, lost-wage component) have accounted for almost 75% of all WC claims. Interestingly, this claim-type distribution reversed when we examined reported COVID-19 claims.

Of all the reported pandemic-related claims with a payment or loss reserve, almost 75% have an indemnity component, while only 25% are medical-only.

By Size of Loss

As shown in the chart below, most of the reported COVID-19 claims to date have associated costs less than $1,500 and almost 95% have costs less than $10,000.

Further, while larger claims—those with losses greater than $100,000—represent about 1% of all COVID-19 claims, they account for approximately 60% of reported COVID-19 losses to date. Claims in this category are generally more likely to remain open for extended periods of time, involve older workers, require inpatient hospitalization, and involve more complications due to the existence of comorbidities.

Ultimate COVID-19 Losses

The white paper published in 2020 focused on COVID-19 claims requiring medical services beyond a COVID-19 test, which NCCI estimates costs $120 or less. Of the 45,000 pandemic-related claims reported to NCCI through year-end 2020, approximately 17,000 had associated medical case-incurred losses in excess of $120. This subset of claims accounted for $233 million of the $260 million case-incurred COVID-19 losses reported to NCCI for Accident Year 2020.

The table below classifies these claims—which we will refer to as nonquarantine claims—by the severity of medical services needed for treatment and provides NCCI’s latest COVID-19 severity estimates for each. NCCI’s selected ultimate nonfatal severity estimates reflect indemnity and medical losses and include development for permanent disability outcomes on moderate and severe cases (i.e., those requiring hospital stays), which are anticipated to be a material consideration when estimating ultimate costs for COVID-19 claims.

The estimated nonquarantine claim distribution and nonfatal severities shown above were derived using COVID-19 claims reported on NCCI’s Medical Data Call. Further details for these estimates can be found in NCCI’s “COVID-19 and Workers Compensation: Severity Assumptions Update (PDF).” This distribution of claims and ultimate severities may be used to estimate ultimate COVID-19 WC losses.

In determining a COVID-19-related WC loss estimate that contemplates the expected full duration of the pandemic, we must account for the following:

  • anticipated COVID-19 claim and loss development, including ongoing exposure of contracting the virus during Accident Year 2021
  • the potential for COVID-19-related mental injuries and respiratory issues

As a result, NCCI estimates that COVID-19 claims, excluding self-insureds, have the potential to ultimately result in WC losses exceeding $500 million over the entire duration of the pandemic across jurisdictions where NCCI provides ratemaking services. Going forward, NCCI will continue to monitor COVID-19 claim activity and share the results of related analyses with the industry, as appropriate.


This document includes assumptions and projections. As with any prospective analysis, there exists uncertainty in these assumptions and projections. The areas of this analysis subject to uncertainty that could have a material impact on the results include:

  • The assumption that the COVID-19 pandemic diminishes in Calendar Year 2021
  • The enactment of presumption orders and/or legislation—particularly the impact that retroactive orders or legislation could have on incurred but not yet reported claims
​This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.

1The 38 jurisdictions where NCCI provides ratemaking services are Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, and West Virginia.
2NCCI’s 2021 Annual Statistical Bulletin.