NCCI Finds Comp Injury Declines With Economy

The frequency of workers’ compensation injury claims declined by about 2.5 percent in 2007, a decrease helped in part by the economic downturn, National Council on Compensation Insurance, reported yesterday.

One of the drivers of the injury rate, NCCI said, is the business cycle, which during economic expansions can result in hiring of more injury prone less-experienced workers.

The Boca Raton, Fla.-based rate and data service organization said, however, that the reduction in injury claims last year was much smaller than in the previous two years, when the claim frequency was reduced by 6.7 percent in 2006 and 6.8 percent in 2005.

NCCI said that while accident year 2007 saw overall declines in claim frequency, there were overall increases in indemnity and medical severities.

The increase in indemnity lost-time wage claims is projected to have been 4 percent last year, NCCI reported, outpacing wage inflation, which rose 3.3 percent according to the U.S. Bureau of Labor.

Medical claims costs in 2007 were found to have increased by 6 percent, growing faster than the Consumer Price Index for medical care, which was 4.4 percent.

NCCI said the continuing frequency decline spanned all industry groups.

In addition to a lack of new untrained workers being added to payrolls, NCCI said other factors that influence frequency are global competition, increased use of robotics, increased use of modular design and construction techniques, increased use of power-assisted processes, advances in ergonomic design and proliferation of cordless tools.

The company also mentioned the impact of more and better job training, continued emphasis on workplace safety, improved fraud deterrents and older workers who tend to have fewer workplace injuries.

By region, the NCCI report said, the frequency decline was greatest in the Midwest--23 percent over the past five years.

NCCI said permanent total disability claims have increased significantly over the last three years and are highest for contracting and other industries that fall in the “miscellaneous” category.

By region, permanent total claims grew the most in the Southeast.

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, NCCI said.

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