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Projected COVID-19 workers compensation claim costs for accident years 2020 and 2021 in California are projected to be more than $1 billion, and these claims, along with declining premium levels, have put the estimated combined loss and expense ratio in the state’s comp system over 100% for the first time in nearly a decade, according to a report released Tuesday by the Workers Compensation Insurance Rating Bureau.
Nearly 150,000 COVID-19 workers compensation claims were filed in 2020 and the first half of 2021, although overall claim frequency was offset by a reduction in non-COVID claims, which declined more than 20% from 2020 compared with the prior year. Premium levels dropped sharply in 2020 due to the economic slowdown and continued rate decreases, but are expected to modestly increase in 2021, according to Oakland, California-based WCIRB’s 2021 State of the System report.
The estimated number of ultimate compensable COVID-19 claims for accident year 2020 among California insureds is more than twice what the bureau projected in its Jan. 1, 2021, pure premium rate filing, according to the report, and rate decreases brought on by the economic downturn caused premium to hit the eight-year low of $13.9 billion — 23% below its prior 2016 peak. Although the bureau predicts total written premium to increase modestly in 2021, it’s expected to remain well below the level from 2014 to 2019 at an estimated $14.3 billion.
The WCIRB also projects a steady increase in average indemnity costs through 2022 compared with the pre-pandemic level with the average indemnity cost per claim in 2020 at $28,939. The increase, which is preliminary, is based on temporary disability payments paid, and average indemnity will likely remain high through 2022, according to the bureau.
Average medical costs decreased to $27,940, continuing a downward trend since 2011 when the average was more than $35,000 per claim. However, the projected average cost could be negatively impacted by deferred medical treatment on claims and is likely to increase modestly through 2022, WCIRB said.
Physical therapy, acupuncture and chiropractic care are consistently corresponding with lower opioid prescription use in workers compensation, according to a Workers Compensation Insurance Rating Bureau study released Thursday.