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Member, Beacon International Group, Ltd.
The decline in workers compensation claims frequency that began during the 1990s is widespread and continued into 2006, NCCI Holdings Inc. reported Monday in an annual study.
Indemnity costs and medical severities are still rising, however, although their rate of increase has tapered off, the Boca Raton-based National Council on Compensation Insurance said in its Summer 2007 research brief. The annual increase in average indemnity costs per claim, for example, rose 9.9% from 1997 to 2001. But the rate of increase has declined to 3.5% since then, including a 5.5% drop for 2006.
Increases in average medical cost per claim "remain substantial" and rose 7.5% in 2006, NCCI said. Medical costs per claim have increased an average of 8.5% per year over the last five years, which is less than a 10.3% annual increase from 1997 to 2001.
To gauge claim frequency activity, NCCI compared policies expiring in 2001 with those expiring in 2005 and found, among other things, that lost-time claims of $2,000 experienced a 27% decline, while claims with costs of more than $50,000 declined by more than 25%.
The decline in frequency has occurred across all major industries and spanned nearly all occupations, NCCI found in its study of data from 38 states for which it helps set rates. The decline was driven by increased attention to safety, among other factors.
NCCI's complete study is available at www.ncci.com.