National WC Frequency Rates Up for first time in decades

The following is from an announcement from the National Council of Self-Insureds, and quotes highly respected national experts in workers' compensation.  If this trend holds, combined with recent changes in U&T guidelines, payment rates and case law developments, Montana's status as the most expensive jurisdiction in all of the United States will be assured for time to come.


Members of the National Council of Self-Insurers:

Since 1991 workers’ compensation claims have declined significantly.  The average has been 4% per year.  The main causes have been improved safety programs and workplace automation.

During the past year, however, claims have risen by 2 to 5%. The upturn may be driven by factors typically occurring, as the economy moves into recovery from a recession.

Although it is too early for data to verify whether a slight rise amounts to an ongoing trend, recent hiring of new, temporary and seasonal workers may be among the reasons for the rise in claims.

Safety and risk management budgets that were slashed during the recession, a leaner work force doing more work, employees losing fear of filing claims as alternative job prospects improve, also may be factors, said Joe Picone, Chief Claim Officer for Willis North America’s Strategic Outcomes Practice, and a speaker at a recent meeting of the National Council of Self-Insurers.

Although hiring remains anemic, the 18 month-long great recession ended in June 2009, according to the National Bureau of Economic Research of Cambridge, MA.

Historically, claims surge at the end of recessions, as new workers typically suffer more injuries than experienced employees.

Recently created jobs are lower paying, which tend to drive more claims than better paying jobs, said Neil Harrison, Group Managing Director of Risk Control of the AON Corporation in Chicago.  The sort of hiring that is going on is at the level in an organization that is likely to drive frequency up, Mr. Harrison said.

While the increase in claims is small and the time is too early to scientifically analyze the data, the increase does represent a reversal from claim decreases during the past twenty years and particularly during the depth of the recent recession.

The above is from a recent article in Business Insurance, written by Roberto Ceniceros, Senior Editor.