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Claims Trends

WC Frequency Poised to Continue Long-Term Decline

Following a 2010 uptick, claims frequency has declined for three straight years at an average rate of about 3 percent per year.
By: | August 18, 2014 • 3 min read

Injuries involving the arms and shoulders bucked the trend of declining frequencies of most other body parts over the past five years. That’s among the findings in a new report on claims frequency in the workers’ comp industry.

While the Great Recession was likely responsible for frequency changes in recent years, other factors are now apparent. NCCI has drilled down into the particulars driving recent rates of injuries.

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“The 2010 increase in frequency, the first increase in 13 years, may have been the result of recession-related factors,” said the research brief. “Despite the 2010 uptick, claim frequency resumed its decline in Accident Years 2011, 2012, and 2013. These are very positive signs that suggest that frequency will continue its historical long-term rate of decline.”

The research brief, Workers Compensation Claim Frequency — 2014 Update, expounds on data presented at NCCI’s Annual Issues Symposium earlier this year. The report also includes detailed information on frequency changes by selected claim characteristics and for policies with versus without small deductibles.

Overall Trends

“Claim frequency increased 3.5 percent in Accident Year 2010, the first significant increase in frequency in 20 years,” the report states. “Following the 2010 uptick, claim frequency has declined for three straight years at an average rate of about 3 percent per year.”

Evidence suggests an influx of small lost-time claims contributed to the increase in claims frequency for AY 2010. Workers fearful of losing their jobs may have delayed filing claims in 2009, but then filed them when the economy began to rebound, the authors suggest.

“Despite the 2010 uptick, claim frequency resumed its decline in Accident Years 2011, 2012, and 2013. These are very positive signs that suggest that frequency will continue its historical long-term rate of decline.” — NCCI

One of the changes seen in the most recent figures is the significant decline in frequency of claims above $50,000 in accident year 2012. These claims declined by more than 7 percent, whereas claims between $10,000 and $50,000 declined by 3.1 percent and small claims declined by just 1.4 percent. A closer look reveals two major drivers in the larger claims category.

“Within the Part of Body group, we found that the frequency of lower back claims declined by 11 percent versus 6 percent for all other claims in the category,” the report says. “Similarly, within the Cause of Injury group, we found that the frequency of slip and fall injuries declined by 12 percent versus 4 percent for all other claims in the category.”

Additional Breakdowns

Over the last five years, the frequency of injuries for most body parts declined by 13.9 percent while the frequency of injuries involving multiple body parts declined by 22 percent.

The frequency rate for arm and shoulder injuries, which represent 15 percent of injuries, remained flat. “This may be influenced by an older workforce,” the report suggests, “where rotator cuff injuries are not uncommon.”

In terms of the injury type, frequency for permanent partial and temporary total claims were consistent with the overall decline of 13.9 percent for all injury types while fatal and permanent total claims showed more volatility each year, due to the smaller volume of these claims. The authors note that the figures are based on injury type reported as of first report and that the development of claim counts can differ considerably as they reach ultimate level.

“For example, subsequent to first report, some claims will become fatal claims and others will become PTD claims,” the report explains. “Fatal claim frequency at first report is more than three times higher than permanent total disability claim frequency. However, this difference will decline as claims age since more PTD claims than fatal claims will emerge beyond first report.”

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Sprain/strain, comprising the majority share of claims by nature of injury, declined by 10 percent. That compares to a decline of 17 percent for all other categories combined. The frequency of carpal tunnel syndrome claims dropped by 25 percent, although the rate of decline has slowed in the most recent years.

In terms of the cause of injury, there was a steep drop in the frequency of cumulative injury claims — more than 18 percent. Injuries in the category of cut/puncture/scrape dropped by 23 percent. “A possible explanation is that the types of injuries in both of these categories may be relatively more preventable through loss control and safety measures.”

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

2018 Risk All Stars

Stop Mitigating Risk. Start Conquering It Like These 2018 Risk All Stars

The concept of risk mastery and ownership, as displayed by the 2018 Risk All Stars, includes not simply seeking to control outcomes but taking full responsibility for them.
By: | September 14, 2018 • 3 min read

People talk a lot about how risk managers can get a seat at the table. The discussion implies that the risk manager is an outsider, striving to get the ear or the attention of an insider, the CEO or CFO.

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But there are risk managers who go about things in a different way. And the 2018 Risk All Stars are prime examples of that.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Goodyear’s Craig Melnick had only been with the global tire maker a few months when Hurricane Harvey dumped a record amount of rainfall on Houston.

Brilliant communication between Melnick and his new teammates gave him timely and valuable updates on the condition of manufacturing locations. Melnick remained in Akron, mastering the situation by moving inventory out of the storm’s path and making sure remediation crews were lined up ahead of time to give Goodyear its best leg up once the storm passed and the flood waters receded.

Goodyear’s resiliency in the face of the storm gave it credibility when it went to the insurance markets later that year for renewals. And here is where we hear a key phrase, produced by Kevin Garvey, one of Goodyear’s brokers at Aon.

“The markets always appreciate a risk manager who demonstrates ownership,” Garvey said, in what may be something of an understatement.

These risk managers put in gear their passion, creativity and perseverance to become masters of a situation, pushing aside any notion that they are anything other than key players.

Dianne Howard, a 2018 Risk All Star and the director of benefits and risk management for the Palm Beach County School District, achieved ownership of $50 million in property storm exposures for the district.

With FEMA saying it wouldn’t pay again for district storm losses it had already paid for, Howard went to the London markets and was successful in getting coverage. She also hammered out a deal in London that would partially reimburse the district if it suffered a mass shooting and needed to demolish a building, like what happened at Sandy Hook in Connecticut.

2018 Risk All Star Jim Cunningham was well-versed enough to know what traditional risk management theories would say when hospitality workers were suffering too many kitchen cuts. “Put a cut-prevention plan in place,” is the traditional wisdom.

But Cunningham, the vice president of risk management for the gaming company Pinnacle Entertainment, wasn’t satisfied with what looked to him like a Band-Aid approach.

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Instead, he used predictive analytics, depending on his own team to assemble company-specific data, to determine which safety measures should be used company wide. The result? Claims frequency at the company dropped 60 percent in the first year of his program.

Alumine Bellone, a 2018 Risk All Star and the vice president of risk management for Ardent Health Services, faced an overwhelming task: Create a uniform risk management program when her hospital group grew from 14 hospitals in three states to 31 hospitals in seven.

Bellone owned the situation by visiting each facility right before the acquisition and again right after, to make sure each caregiving population was ready to integrate into a standardized risk management system.

After consolidating insurance policies, Bellone achieved $893,000 in synergies.

In each of these cases, and in more on the following pages, we see examples of risk managers who weren’t just knocking on the door; they were owning the room. &

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Risk All Stars stand out from their peers by overcoming challenges through exceptional problem solving, creativity, clarity of vision and passion.

See the complete list of 2018 Risk All Stars.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]