Posted Date: March 24, 2025

Key Takeaways

  • The 2023 countrywide average change in lost-time claim frequency is –7.6%
  • The 2023 countrywide average changes in indemnity and medical severities are +4.6% and +2.3%, 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 2023. The countrywide results are for all jurisdictions where NCCI provides ratemaking services. This report was prepared as of March 21, 2025.

In the chart below, a circle represents data for an individual jurisdiction. For Accident Year 2023, frequency decreased in almost all jurisdictions. After some volatility during the COVID-19 pandemic, the 2023 countrywide average change in lost-time claim frequency has returned to the long-term pattern of decline, with a change of –7.6%.

Results for indemnity and medical severity varied, with most of the individual jurisdiction changes ranging from +0% to +10% for indemnity and from –5% to +14% for medical. The variation observed across individual jurisdiction severity changes may be driven by factors such as the occurrence/absence of large losses, the impact of legislative reform, economic environment, and/or differences in industry mix across jurisdictions. The 2023 countrywide average changes in indemnity and medical severities are +4.6% and +2.3%, respectively.

The higher average change in indemnity severity is largely driven by increased wages, which have risen significantly in recent years. Relative to indemnity, the average change in medical severity in the latest year has been more moderate. This change is in line with recent medical inflation price indices. In addition, fee schedules in most jurisdictions function well as a control mechanism for most categories of medical costs. Because premiums are based on wages, higher severity costs are naturally offset by premiums also increasing at the rate of wage inflation. In 2023, the countrywide average change in wage inflation was +3% and, cumulatively, since 2019 wages have increased over +20%.


The following charts illustrate the average annual changes in frequency and severity observed between 2019 and 2023 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 2019 and 2023 was –3.2%. Average frequency declines were observed in most jurisdictions. Average annual frequency changes by individual jurisdiction range from –6.2% to +5.4%.

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

Between 2019 and 2023, the average annual indemnity severity change across all jurisdictions was +3.9%. Maine had the largest average annual increase (+8.6%), while Alaska had the largest average annual decrease (–0.4%).

During this same period, the average annual medical severity change across all jurisdictions was +2.3%. South Dakota (+9.7%) and Vermont (–3.2%) 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.

Notes:

  • 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:


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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. Calendar Year 2019–2023 premium is further adjusted to reflect changes in audit activity primarily attributable to the pandemic-related recession.
  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. The Calendar Year 2020–2021 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. The factors applied to Calendar-Accident Years 2020–2023 have 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, consistent with each jurisdiction’s loss cost/rate filing. 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 Colorado, Hawaii, Idaho, Kentucky, Louisiana, Maryland, Missouri, Montana, New Mexico, Oklahoma, Oregon, Rhode Island, and Texas 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