Last week, NCCI reported on a recent study on workers’ compensation claim frequency and, as they reported last year, frequency continues to decline. They cite several potential reasons for this – employer safety initiatives, increased use of robotics and power assisted processes, and ergonomics, to name a few. Here is a breakdown by size of claim – note that the highest decreases are in the smaller claims, and the decreases in high-dollar claims are significantly less pronounced:
- For claims less than $2,000, a decline of approximately 35%
- For claims between $2,000 and $10,000, a decline of 18%
- For claims between $10,000 and $50,000, a decline of 8%
- For claims more than $50,000, a decline of 8%
The severity decrease is the good news. The flip side of the coin is that medical and indemnity costs are galloping full steam ahead in the wrong direction. Not so good at all.
In the early and mid-’90s following reforms, indemnity was relatively stable. But according to NCCI actuary Tony DiDinato, “The last seven years have seen the trend turn upward once again, with workers compensation indemnity claims increasing an average of 7.4% annually since 1996. In 2001 and 2002, respectively, claim costs rose 7.3% and 6.0%.”
DiDinato goes on to characterize medical claim cost trends are alarming, “with double-digit increases the last two years.” He attributes this to increased utilization and prescription drug costs.
Cleary, employers are making progress in workplace safety (although we would advocate that any injuries are too many injuries) but it would appear that they must do a much better job of managing injuries from the point they occur right on to an employee’s successful return to work. Perhaps the “buyer’s market” of the late 1990s lulled some employers into forgetting how vital this is?
It brings to mind an old Bob Dylan lyric: “And here I sit so patiently, waiting to find out what price you have to pay to get out of going through all these things twice.”
