NCCI’s annual update of frequency and severity results is based on data reported to NCCI on the Calendar-Accident Year Financial Data Call. The results are provided by individual jurisdiction, based on lost-time claim data valued as of year-end 2019. The countrywide results are for all jurisdictions where NCCI provides ratemaking services. This report was prepared as of March 12, 2021.
In each chart below, a circle represents data for an individual jurisdiction. For Accident Year 2019, frequency decreased in the majority of states, with changes ranging from –11% to +4%. Severity, on the other hand, increased in the majority of states, with most changes ranging from –7% to +15% for both indemnity and medical. Individual state severity changes may be driven by factors such as the occurrence/absence of large losses and/or the impact of legislative reform. The 2019 countrywide change in lost-time claim frequency is –4.3%, which is consistent with historical frequency changes. The countrywide changes in indemnity and medical severity are +4.2% and +3.7%, respectively.
The following charts illustrate the average annual changes in frequency and severity observed between 2015 and 2019 by individual jurisdiction. Reviewing average changes over a longer time period smooths out year-to-year volatility.
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The countrywide average annual frequency change between 2015 and 2019 was –3.8%. Changes in average claim frequency ranged from –7.6% to +0.2%, with declines observed in nearly all jurisdictions.
In most jurisdictions, average severities have increased over this five-year period.
Between 2015 and 2019, the average annual indemnity severity change across all jurisdictions was +3.1%. Nevada had the largest average annual indemnity severity increase (+8.4%), while Montana had the largest decrease (–2.1%).
During this same period, the average annual medical severity change across all jurisdictions was +3.3%. Hawaii had the largest average annual medical severity increase (+11.3%), while Georgia had the largest decrease (–2.0%).
The following interactive section provides information on the frequency and severity of lost-time claims by individual jurisdiction on year-to-year and cumulative bases. In addition, regional and countrywide (i.e., all NCCI states) averages are also provided.
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Note: Data based on the jurisdiction’s filed development methodology.
The following table summarizes the differences in methodology between this frequency and severity report and the state-specific analyses performed as part of the rate filing review process.
Methodology | Frequency and Severity Results by State | Rate/Loss Cost Filings |
---|---|---|
Experience Base | Calendar-Accident Year | Policy Year |
Loss Limitation Applied | No | Yes; in most states |
Losses on Current Benefit Level | No | Yes |
Severities Adjusted to Current Wage Level | No | Yes; thus the resulting changes in severity are in excess of wage growth |
Medical-Only Losses Included | No | Yes |
The following calculations are applied to the Calendar-Accident Year Financial Call data by individual jurisdiction.
Frequency
- Indemnity (lost-time) claim counts are developed to an ultimate report
- Calendar year premium is adjusted to the current rate/loss cost level
- Expense-related premium, including expense constant premium, is excluded to adjust the current-level premium to a pure premium basis
- The pure premium is brought to the current wage level by multiplying by the ratio of current-to-historical average weekly wages
- Frequency is the result of dividing the ultimate claim counts by the wage-adjusted, on-leveled pure premium in millions of dollars
Severity
- Paid and/or paid plus case losses are separately developed to an ultimate report
- Indemnity (lost-time) claim counts are developed to an ultimate report
- A factor to remove medical-only loss amounts by jurisdiction is estimated using Statistical Plan data and applied to ultimate medical losses
- Severity represents ultimate losses divided by ultimate lost-time claims
Countrywide results are determined by summing the data from each individual NCCI jurisdiction. Each jurisdiction’s premium, claim counts, and losses are developed using a methodology consistent with the approach used in the most recent rate/loss cost filing.
From one accident year to another, results at a state level may be volatile due to:
For large losses that have a significant impact on the state results, the reported paid plus case amount is used as the best estimate of the claim’s ultimate value. Claims of this magnitude are not frequent, and this adjustment is only made for the valuation in which the predetermined impact threshold is reached.
While reviewing the state-specific results included in this report, there are some limitations to be aware of, which may include: