If COVID-19 behaves like other workers’ compensation lung and disease claims, about two out of 100 cases may result in some degree of permanent partial disability and one out of 2,000 may result in permanent total disability, according to a new report by the National Council on Compensation Insurance.

Jeff Eddinger, NCCI’s senior division executive for regulatory business management, said Thursday that’s not enough to be a major cost driver, but does represent a real risk that insurers should keep in mind when assessing the potential impact of the pandemic on losses.

“The vast majority of COVID claims are small-dollar claims,” Eddinger said in a telephone interview. “There is a small percentage that will result in permanent disability claims.”

NCCI has included the potential for permanent disability into its Hypothetical Scenarios Tool, a calculator released in May that models COVID-19 costs under various scenarios. The calculator allows users to adjust assumptions, such as the percentage of workers who are infected, the percentage hospitalized and now the percentage who are permanently disabled.

Adjusting the calculator to assume no permanent disability claims results in projected COVID-19 costs of $25.1 billion for the 38 states that use NCCI services. But the total cost increases by $4 billion when using the new default settings for permanent disability provided by NCCI.

For those defaults, NCCI assumes that 3% of workers with severe cases of COVID-19 will receive permanent total disability benefits and 40% will receive permanent partial disability benefits. For moderate infections, NCCI assumes 20% will receive permanent partial disability benefits.

NCCI assumes that 90% of workers who file COVID claims will suffer only mild cases. Those will result in a “negligible rate” of permanent disability.

NCCI said in a previous study that it assumes 8.5% of workers who file claims will require hospitalization for moderate symptoms and 1.5% will develop severe cases that require critical care.

The bottom line: There is a 2.3% chance that a reported COVID-19 claim will result in permanent partial injury and there’s a 0.05% chance that a COVID claim will result in a permanent total injury.

The ratings house deduced potential permanent disability costs by examining data for lung infection claims and occupational disease claims involving the lung. (Black lung cases were not included in the data). Researchers assumed that moderate COVID cases will behave like lung infection claims, of which 20% to 25% result in permanent partial disability. Severe cases were presumed to behave like other lung claims, of which 40% to 50% result in permanent partial disability and up to 10% result in permanent total disability.

Data reported by state officials in California and Florida suggests that COVID-19 claims have become a sizable fraction of the total number of workers compensation claims filed. According to the California Division of Workers’ Compensation, COVID-19 was the cause of 44,354 first reports of injury from Jan. 1 to Sept. 30, or 11% of the total number.

The Florida Division of Workers’ Compensation reports that 21,221 COVID-19 indemnity claims have been filed as of Sept. 30, or 31.8% of the total number of injury and illness claims in the state.

But the large share of COVID-19 claims is counteracted by a reduction in the number of other types of claims. Eddinger said the pandemic’s impact on the economy accounts for much of that decline. Also, he said employees who telecommute are less likely to file work injury claims than workers in offices and fewer numbers of employees are traveling for their jobs, choosing to communicate remotely instead.

Marsh issued a report this week that concludes, “many of the most dire predictions about COVID-19’s impact on workers’ compensation systems have not been realized.”

“Claims of COVID-19 exposure in the workplace have been outpaced by a decline in other types of reported occupational injuries, and the workers’ compensation insurance market remains competitive,” the report says.

Marsh said data from its clients shows that the number of new claims reported from January through August showed illness and injury rates ranged from a 29% decrease in April to a 5% increase in June.

“Ultimately, new injury claims could fall by 20% in 2020, according to a survey of workers’ compensation industry participants published by consulting firm Health Strategy Associates,” Marsh said. “This is in part due to broader employment trends — including high unemployment, widespread furloughs, and a reluctance by some employees to file claims while their job prospects are uncertain — that have generally kept non-COVID-19 claims at bay.”

The claims filed so far have proven to be inexpensive: 96% cost less than $3,500, according to one respondent to the Health Strategy Associates survey.

“The remaining 4% of claims, however, can cost employers substantially more — into the hundreds of thousands of dollars,” Marsh said. “Some coronavirus patients — particularly those with preexisting medical conditions such as diabetes, hypertension, obesity, chronic lung disease, or heart disease — have required extended hospitalizations, including in intensive care units (ICUs).”

Also, Marsh said the total number of COVID-19 claims may ultimately exceed the number reported to date. For example, Marsh projects that the 5,130 reported claims in California in August will grow to 8,208 claims eventually.

“In addition to claims for occupational exposure to COVID-19, an influx of post-traumatic stress and mental health claims could also be on the way,” Marsh said.

About the photo: Members of the Georgia National Guard work to clean and disinfect hallways and common areas at Provident Village assisted living and memory care home Tuesday, May 5, 2020, in Smyrna, Ga. Despite having no cases among residents or staff the home welcomed the extra help from the guard. (AP Photo/John Bazemore)

*This story ran previously in our sister publication Claims Journal.