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Indemnity-only Claims Surprising Spike During Pandemic


Indemnity-only Claims Spiked During the Pandemic – Why?

I have reviewed thousands of loss runs in my consulting career, I have not to date seen on loss runs any indemnity-only claims.  That was before the pandemic that changed so many variables in the WC system.

As a quick review, the three types of workers comp benefits are indemnity, medical, and allocated loss expenses (ALAE).   Approximately 85% of all workers comp claims are medical-only claims.   Claims with lost time benefits total approximately 15%.   Those are my numbers from performing loss run analyses for 35 years.  Indemnity-only claims used to be an extreme rarity.

Total Claim Numbers Fell For Years

The total number of WC claims (frequency)  had been falling for many years. while claim severity had increased.  What caught my eye in this study was that overall total claim counts increased due to COVID-19 claims.

Indemnity-only Claims Definition

infographic of indemnity-only claims workers comp rating bureaus
(c) Respective WC Bureaus Included

A great study on the pandemic by most of the Workers Comp rating bureaus was published in three different phases.  The one that I am referring to can be found at this link.

The rating bureaus’ combined study defined the modern term as:

A typically small claim, representing a few weeks of indemnity payments. Examples include mild cases where a positive COVID-19 test was not reimbursed through WC, quarantine claims (where covered), and/or claims where the medical was paid by another payer. Quarantine claims are those where there was no positive COVID-19 test but the worker was reimbursed for lost time while quarantining from exposure to the pandemic. These claims are only explicitly covered in some jurisdictions.

The workers comp rating bureau that participated in the collaboration are represented in the above infograph.

This was an impressive job to combine all the rating bureau info into one document which was a large project.  I recommend downloading it if not for anything more than reference.  Once downloaded, you may want to at least skim over the information – worth the time.

Indemnity-only claims while uncommon for non-COVID-19 claims, continued to represent the largest share of COVID-19 claim types. By the end of 2021, 47% of COVID-19 claims were Indemnity-only claims.  On average, these claims are relatively less costly, accounting for a relatively small amount of total loss. —an average cost of approximately $9,600 per COVID-19 claim from Accident Years 2020 and 2021 as of year-end 2021. The average lost time claim pegged at $45,000.


graphic Distribution COVID-19 Indemnity-only claims
(c) All Bureaus


James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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