“Mega” workers compensation claims from the construction sector comprised approximately 40% of large claims from 2001 to 2017, yet made up 20% of indemnity claims, according to research released Tuesday by six ratings agencies including the National Council on Compensation Insurance and the Workers’ Compensation Insurance Rating Bureau of California.

Researchers analyzed comp claims that surpass $3 million in costs,  analyzed comp claims that surpass $3 million in costs, finding that while such mega claims are “relatively infrequent” compared with the more typical compensation claim, such claims are a “highly unpredictable component” of the industry.

“With medical advances, improving mortality patterns particularly for those with serious injuries, increasing prevalence and cost of home health care and reform-related cost reductions in some states,” the report hints that the cost of these claims may be increasing.

Approximately 4,500 claims from accident years 2001 through 2017 were reported as of Dec. 31, 2018, with incurred loss in excess of $3 million at 2018 cost levels, which is approximately one out of every 2,500 reported indemnity claims.

Of those, 57% were between $3 million and $5 million, 33% between $5 million and $10 million and 10% in excess of $10 million, according to the report.

The report also found that the rate of reported mega claims dropped sharply during the Great Recession as construction employment plummeted in most of the country. Since 2013, the share of mega claims has increased steadily with the estimated accident year 2017 mega claim counts hitting a 12-year high.

Other highlights of the report include:

• Mega claims arising from brain and head injuries comprise 17% of mega claims between $3 million and $5 million, but 30% of claims in excess of $10 million. These claims comprise well below 5% of all indemnity claims in most states.
• Motor vehicle accidents give rise to more than 20% of mega claims, but 5% or less of all indemnity claims in most states.
• Claims often take some time to breach the $3 million threshold. Less than one-half of mega claims reach the $3 million threshold by 18 months from policy inception, and less than 90% reach that threshold by 126 months from policy inception. However, mega claims are generally reaching the $3 million threshold more quickly than in the past.
• Mega claims arising from the construction sector reach the $3 million threshold more quickly than those arising from the office/clerical sector. Similarly, mega claims arising from motor vehicle accidents, “struck by object” injuries, and head and brain injuries reach that threshold more quickly than other mega claims. In contrast, mega claims involving strain and sprain injuries reach the $3 million threshold more slowly.