Moderating comp losses, higher adjustment expenses in California: Study

Consulting firm Keenan HealthCare and actuarial consulting firm Milliman on Wednesday released the 2017 results of their California Hospital Workers' Compensation and Payroll Benchmarking Survey. 

This is the third time Torrance, California-based Keenan and Seattle-based Milliman studied data from 18 hospital systems and 44 individual facilities in California, representing data on over 4,300 annual claims statewide, according to a press release. The survey identified several workers comp trends in the hospital sector:

• Projected loss cost for accidents occurring during 2016 and 2017 at $2.10 per $100 of payroll. Average losses paid per indemnity claim increased 2.9% annually over the past 10 years.
• Medical loss trends abated in recent years. Indemnity loss trends are less than long-term averages. Combined, these have resulted in a lower annual rate of severity increase as compared to prior versions of this study.
• Annual allocated loss adjustment expenses, or ALAE, increased significantly during this time period, representing an increasing share of the total cost of claims.

“Looking forward, we expect longer term trend rates closer to 5% or 6% to prevail, with stronger medical and indemnity loss trends than the recent past, and ALAE trends remaining high,” a Keenan spokesperson said in a press statement. “We believe these key indicators will be valuable in developing plans to modify or adjust programs where necessary with the goal of improving results.”