Workers' Comp Costs Rise as Claims Drop

Sometimes a positive trend doesn't always equate a positive result. Such is the case in the current workers' compensation market.

According to the National Council on Compensation Insurance's (NCCI) latest research brief, the decline in claims frequency for workers' compensation injuries continued in 2009, and economic factors suggest further reductions are likely in 2010.

Preliminary results indicate a 4% drop in claim frequency for 2009, which follows a 3.4% drop in 2008 and extends a downward trend that started in 1991.

However, that positive news is tempered by the NCCI’s latest data also revealing that, while claim frequency is down, indemnity and medical severities continue to rise.

The NCCI also identifies the following key findings from the report:

            •      Preliminary data for Accident Year 2009 reveals a continued overall decline in claim frequency and overall increases in indemnity and medical severities.

            •      Over the past five years, the decline in frequency continues to be widespread. Frequency declines were observed for all industries, geographic regions, and employer sizes, as well as for most claim types.

            •      Claims considered “Likely-to-Develop” exhibited a larger percentage frequency decline than those considered “Not-Likely-to-Develop.”

            •      Some of the more complex claims, such as carpal tunnel and lower back, declined more than average over the latest five years.

            •     Frequency changes vary considerably by type of injury.

            •      Injury type differences notwithstanding, frequency changes are relatively consistent by size of loss for claims under $250,000.

Click here to read the full brief.