Report: Workers Compensation Claim Frequency Down Again in 2007

The decline in claim frequency for workers compensation injuries continued into 2007, but the magnitude is much smaller than in the previous two years, according to the National Council on Compensation Insurance.

The 2007 drop in claim frequency extends a trend that started in the
1990s. But while claim frequency improved by nearly 7 percent in each of the previous two years, preliminary results indicate a more modest decline of 2.5 percent for 2007, NCCI reported.

NCCI’s latest review of claim frequency and severity shows that, while claim frequency is down, indemnity and medical severities continue to rise.

In the course of updating its annual study to reflect the latest frequency and severity results, the organization added a new dimension. Claim frequency changes for permanent total claims, the costliest 1percent of lost-time claims, are examined this year.

A key issue facing employers and workers compensation insurers is whether the large declines in claim frequency that began in the 1990s are likely to continue, NCCI said. Virtually every major employment category examined has experienced marked declines, according to the report.

Preliminary summary data for accident year 2007 reveals continued overall declines in claim frequency and overall increases in indemnity and medical severities.

NCCI Key Findings:

· Over the last five years, there were significant declines in total
lost-time claims frequency for all industries, geographic regions, and
employer sizes

· Permanent total claims have increased significantly over the last
three years

· The rise in permanent total claims is evident across industries,
regions, and payroll sizes

· From 2004 to 2006, the increase in permanent total claims may have increased lost-time indemnity severities by approximately 1.5 percent per year and lost-time medical severities by approximately 2.5 percent to 3 percent per year.

Source: NCCI Holdings Inc.
www.ncci.com