Workers Compensation Claim Frequency Down Again - June 2005

Posted Date: June 2005
    

The decline in claim frequency for workers compensation injuries has continued into 2004—good news for workers, employers, and their insurers. This decline continues to be the greatest for smaller claims.

The higher rate of frequency decline for smaller claims than for larger claims has contributed to an increase in severity (average cost per claim). The latest NCCI research indicates that approximately 30% of the growth in severity in recent years, or about 2.5% out of the 8.4% average annual increase, can be attributed to this uneven claim frequency decline.

Key Findings

  • There has been a larger decline in the frequency of smaller lost-time claims than in the frequency of larger lost-time claims. This relatively larger decline in the frequency of smaller claims adds two to three points a year to the severity increases caused by rising prices and expanding utilization.
  • Over the last five years, significant declines occurred for all injury types, including permanent total and permanent partial claims. The greater frequency decline for smaller claims is evident within each injury type, other than fatal, and for both indemnity and medical losses.
  • Nearly all parts of body and nature of injury categories experienced significant frequency declines.
  • There appears to be little regional difference in frequency changes by state. For example, western states’ overall claim frequency declined by 23%, and this is the largest regional decline over the five-year period studied. While southeastern states had the smallest overall frequency decline, they still had an 18% decline over that period.
  • The decline in frequency of workers compensation claims spanned almost all occupations and all employer sizes.
  • The shift in occupational mix is a minor contributor to the decline in claim frequency.