Posted Date: March 14, 2022


Key Takeaways

  • The 2020 countrywide average change in lost-time claim frequency is –7.8%
  • The 2020 countrywide average changes in indemnity and medical severity are +5.0% and –2.8%, respectively
  • On average, countrywide lost-time claim frequency decreased over the most recent five-year period, while corresponding indemnity and medical severities increased

Executive Summary

NCCI’s annual update of frequency and severity results is based on data reported to NCCI on the Calendar-Accident Year Financial Data Call excluding COVID-19-related claims. The results are provided by individual jurisdiction, based on lost-time claim data valued as of year-end 2020. The countrywide results are for all jurisdictions where NCCI provides ratemaking services. This report was prepared as of March 11, 2022.

In each chart below, a circle represents data for an individual jurisdiction. For Accident Year 2020, frequency decreased in almost all states. The opposite was true with indemnity severity, as increases were observed in most states. Medical severity results varied, with most of the individual state changes ranging from –12% to +8%. 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 2020 countrywide average change in lost-time claim frequency is –7.8%. The countrywide changes in indemnity and medical severity are +5.0% and –2.8%, respectively.

The following charts illustrate the average annual changes in frequency and severity observed between 2016 and 2020 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 2016 and 2020 was –4.1%. Average frequency declines were observed in all jurisdictions, ranging from –10.8% to –1.1%.

In most jurisdictions, average severities increased over this five-year period.

Between 2016 and 2020, the average annual indemnity severity change across all jurisdictions was +3.9%. Nevada had the largest average annual increase (+9.6%), while Idaho had the largest average annual decrease (–2.0%).

During this same period, the average annual medical severity change across all jurisdictions was +1.3%. Hawaii (+8.3%) and Virginia (–5.7%) experienced the largest average increase and decrease, respectively.

Results by State

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.

Note:

  • While the regional state grid is prepopulated with surrounding jurisdictions, the selection of states may be changed by clicking/unclicking the respective grid squares
  • Underlying quantitative detail is available by hovering


Select state of interest:


Select regional states:

Note: Data based on the jurisdiction’s filed development methodology.

Claim Frequency

Indemnity Severity

Medical Severity

Appendix

Comparison to Rate/Loss Cost Filings

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

Method of Calculation

The following calculations are applied to the Calendar-Accident Year Financial Call data by individual jurisdiction.

Frequency

  1. Indemnity (lost-time) claim counts are developed to an ultimate report
  2. Calendar year premium is adjusted to the current rate/loss cost level
  3. Expense-related premium, including expense constant premium, is excluded to adjust the current-level premium to a pure premium basis
  4. The pure premium is brought to the current wage level by multiplying by the ratio of current-to-historical average weekly wages (Note: The 2020 average weekly wage values exclude the estimated impact of pandemic-related, industry-sector mix changes)
  5. Frequency is the result of dividing the ultimate claim counts by the wage-adjusted, on-leveled pure premium in millions of dollars

Severity

  1. Paid and/or paid plus case losses are separately developed to an ultimate report
  2. Indemnity (lost-time) claim counts are developed to an ultimate report
  3. A factor to remove medical-only loss amounts by jurisdiction is estimated using Statistical Plan data and applied to ultimate medical losses (Note: The factor applied to Calendar-Accident Year 2020 has been adjusted to account for estimated pandemic-related impacts)
  4. Severity represents ultimate losses divided by ultimate lost-time claim counts

Reported COVID-19-related claim experience has been excluded from the data included in this summary. 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.

The data excludes underground coal mine, F-classification, large deductible, national defense project, and excess business experience. Unless otherwise noted, results for Arizona, Colorado, Hawaii, Idaho, Kentucky, Louisiana, Missouri, Montana, New Mexico, Oklahoma, Oregon, Rhode Island, Texas, and Utah include state fund data, as applicable. Results for Florida include self-insured data. Data for the remaining jurisdictions is for private carriers only.

Caveats

From one accident year to another, results at a state level may be volatile due to:

  • Small volumes of data
  • Actual versus estimated loss development
  • Changes in reserve adequacy
  • Closure of claims without indemnity payment (reducing claim counts)

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:

  • The mix of carriers that are included in the experience may change from one data valuation to the next, which may lead to varying results over time
  • These results are based on a mechanical process and neither indicate nor apply to any type of rate adequacy analysis