Greater strides in workplace safety and regulatory reforms have led to positive developments in workers compensation claims frequency and severity, which has in turn driven significant pressure on premium rates to the benefit of employers, experts say.

“Injury rates are declining, and as injury rates decline, costs go down,” said Marjorie Baldwin, a Phoenix-based professor at the W.P. Carey School of Business at Arizona State University and chair of the National Academy of Social Insurance’s Study Panel on Workers’ Compensation Data.

“It’s a mixed story across the states — a number of states have made changes to their workers compensation systems to make them more efficient and less contentious,” she said.

In the midst of a wave of 2019 rate reduction announcements in September and October, many in the double digits, the Washington-based NASI on Oct. 11 released a study that found that employer costs as a share of payroll in 2016 declined over a five-year study period.

When overall comp costs are standardized to control for changes in employment and payrolls, the NASI results showed that employer costs decreased by 4 cents per $100 of covered payroll between 2012 and 2016, with some states faring better than others, according to the report.

Specifically, the NASI study shows costs per $100 of covered payroll decreased in 39 states. Of the states that saw rate hikes, the increases varied between 5 cents and 22 cents per every $100 spent on workers compensation, according to the study.

Meanwhile, the National Council on Compensation Insurance in October provided to Business Insurance workers compensation rate proposals for 2019 that show individual state decreases falling between 3.5% and 19.1%.

“I think the reforms in a lot of states have had a lot to do with it,” said Bill Zachry, a San Carlos, California-based senior fellow with the Sedgwick Institute. “If you look at the overall trends in the U.S., there has been an increase in evidence-based treatment guidelines, which has resulted in better outcomes for the injured workers… and that will help bring down the cost of claims.”

That’s the case in North Carolina, whose Industrial Commission in October announced a 17.2% decrease in average comp rates for 2019 — a reduction that the commission says had much to do with adjustments to state fee schedules that included 5% less in payments for nonhospital providers, a 24% reduction in outpatient treatment costs, and an 11% reduction for inpatient treatment, according to a statement issued Oct. 8.

Yet guidelines that dictate how injuries are treated and what is and isn’t necessary for recovery are just one piece of the puzzle, experts say.

Officials in several states, while approving rates cuts for 2019, have said employers are reporting fewer and less severe claims, which is the result of better risk management when it comes to preventing injuries.

For example, Idaho Department of Insurance Director Dean Cameron said in a statement last month that a 4.2% reduction for 2019 rates “reflects an improvement in our state rating factors, including a slight decline in both the frequency of claims for lost work time, and the average cost of those claims.”

West Virginia Gov. Jim Justice issued a statement on Sept. 13 announcing a 13% rate reduction, thanking businesses for being proactive: “I believe safety measures instituted by a number of our employers in the state with assistance from carriers has helped us get these results.”

NCCI on Sept. 25 released a report detailing a five-year cumulative decrease of 19% in comp claim frequency overall.

“The big theme is workplaces continue to be safer,” said Jeff Eddinger, Boca Raton, Florida-based senior division executive for NCCI. “There are two major components that underline this: (lower) claims frequency and claims severity.”

The insurance industry — touting comp as the most profitable sector in property/casualty — is also pinning the decreases on safety measures.

An analysis by insurance exchange Ivans Insurance Solutions released on Oct. 11 listed workers compensation as the only line seeing a decrease in rates in the third quarter: down 2.8% compared with a drop of 2.5% in the second quarter.

Fitch Ratings Inc. has also named comp the most profitable line in 2017, which has spurred lower rates, according to Jim Auden, Chicago-based managing director in the insurance group for the rating agency.

“Employers are working effectively with insurers in order to make the workplace safer, and we believe loss costs have declined as a result, said Trey Gillespie, Austin, Texas-based assistant vice president of workers compensation with the Property Casualty Insurers Association of America, in an emailed statement. “Most states have experienced an ongoing decline in claims frequency while indemnity, severity, and medical severity have been relatively stable.”