As we all reflect on the events that transpired in 2020, now is the time to lean on the lessons learned so we can move forward together. To shed light on the size and scope of claims activity related to the pandemic — from both an occupational and non-occupational claims perspective — we have compiled statistics and trends from our book of business. These observations and findings may be driven by our client makeup, but they provide insight for companies across many industries.
What we learned:
- Claims volume and activity between occupational and non-occupational incidents differed significantly, with more non-occupational incidents reported than occupational claims.
- Looking at the non-occupational space, Sedgwick has processed nearly 1.7 million claims related to COVID-19 on behalf of our clients as of April 2021.
- The top three reasons for filing a non-occupational claim or leave request were:
- Person reported suspicion of COVID-19, meaning they exhibited symptoms but did not test positive for the virus
- Person tested positive for the virus
- Person reported exposure to the virus but did not contract the virus
- We also looked at trends in activity and noted there was an initial peak in the number of claims reported in April of 2020. The highest peak came in January 2021 and may be the aftereffects of holiday gatherings.
- Looking in the casualty space, there was a peak in claims volume in the early spring in April 2020 and a peak in claims volume during the summer months as the economy began to reopen. We should also note there was a peak in claims reported in November and December with a slight decrease in January. However, in February of 2021 there was a significant decrease in the number of new claims reported.
- In terms of prevalence of claims by location, California led with 26% of total claims volume. Texas and Michigan followed with 16% and 7% of the total claims volume, respectively.
- In terms of claim severity, we developed a model at the outset of the pandemic to project the category of severity that claims would fall into. 90% of the claims could be characterized as minor with nominal expense associated with them. These low severity claims were characterized as having minimal time off from work for such reasons as quarantine, medical testing for COVID-19 and a possible medical visit for follow up. Approximately 8% of the claims could be characterized as minor cases, involving up to six weeks of disability and a few thousand dollars in medical spend. An estimated 1.5% of the cases could be categorized as severe. These typically involved treatment from an intensive care unit (ICU) and extended time away from work, in some cases up to six months. And finally, 0.5% of the cases involved fatalities.
- There were few definitive trends or variations related to age found among the occupational or non-occupational data. It was no surprise that those over 60 years of age were at higher risk and more prone to hospitalization.
- On the non-occupational side, we looked at claim durations. In order for an individual to be eligible for short-term disability, they must meet the definition of disability as defined by the employer’s plan. In other cases, medical documentation is needed to substantiate a claim. In light of the COVID-19 environment, we encouraged self-insured employers to relax requirements such as meeting definitions or medical documentation to substantiate claims to lessen the burden on the system. Many employers followed this approach.
- Most short-term disability claims were around 20 days in duration and the average claims payment was just under $1,700. With unpaid leave of absence, claims averaged around 28 days. These claims sometimes involved family members needing care as opposed to simply the employee.
- When we looked at claims moving from short-term disability to long-term disability, we noted 300 open claims related to COVID-19 in our book, indicating most claims were not severe.
- As a result of COVID-19, there were more than 10,000 requests for work-related accommodations. More than half of these requests were for a leave of absence.
- Additionally, there were requests for environmental modifications such as wearing a face shield instead of a mask, putting up a physical barrier such as plexiglass, or moving to an office space with a door that could be closed.
What we anticipate moving forward:
Looking ahead, there are a number of trends and activities that we are watching closely based on our data and the lessons learned. This includes everything from the direction of OSHA to litigation and presumption activity. To start, we are monitoring long-haul cases. These cases involve individuals who are showing symptoms of COVID-19 after being cleared of the virus. Long-haulers report physical symptoms such as fatigue and body aches. Particularly concerning are the cognitive impairments that are reported in these long-haul cases. This is being described as brain fog and can affect ability to concentrate, speak or recall things. The duration of these symptoms is unknown but their existence can have a significant effect on the workplace. Moreover, cognitive decline can look like mental illness for which there is a stigma. Employers should be aware of the potential for these long-haul cases and provide necessary resources. We will continue to monitor long-haul case activity as more is learned about these lingering conditions.
A positive trend we are keeping an eye on is the increasing use of telehealth to aid in continuity of care for both occupational and non-occupational cases. At one point during the pandemic, telehealth accounted for as much as 17% of the medical care provided on the casualty side. While usage has dropped to around 10%, this is considerably higher than the 0.5% that used telehealth prior to the onset of COVID-19. Also prior to the pandemic, in-person visits were required to substantiate medical conditions under FMLA. In light of the pandemic, the Department of Labor allowed telehealth to satisfy this requirement on a temporary basis last year and in January of 2021, the department announced that telehealth would be allowed on a permanent basis for this purpose.
During the pandemic, we experienced a decrease in litigation in both new and existing claims which is encouraging from an advocacy point of view. However, the pandemic forced many courts to shut down for some time or revert to virtual hearings with many states extending statute of limitations for legal matters. Due to the slowdown, there is a significant backlog of cases. Continuing to focus on litigation prevention as well as resolution strategies is critical to ensure that the downward trend in litigation will continue.
We continue to see presumption activity as a top trend. A number of states issued presumptions for compensability for workers’ compensation last year. Some have extended those presumptions laws through legislation or emergency orders while others are looking at presumptions as a possibility and making it retroactive to March of 2020. If this is the case, those claims that came through but were not accepted would have to be re-evaluated to see if they are now compensable because of the presumption of compensability.
In the claims industry, there is no shortage of activity or complexity, and change is inevitable. After all, it was the pace of change, volume of information and individual needs that made a lasting imprint on the industry this past year. We will continue to monitor the trends and activities that will impact organizations as we move forward. Watch Sedgwick’s channels for additional support and perspective from our thought leaders as your questions are answered.