Experts Cite Exceptions to Downward Frequency Trend
While widely reported data reveals an ongoing, nationwide decline in workers’ compensation claims frequency, risk managers experiencing a departure from the long-term trend shouldn’t feel alone.
It is currently more common to see individual employers experience a leveling off, or even an uptick, in claim frequency, after seeing years of decreasing injuries among their workers, observers said. Such increases can typically be attributed to one of several factors.
Some employers, for instance, are experiencing a spike in claims driven by long-term employees who are growing older, said Patricia M. Ennis, senior risk consultant for Willis Group and president-elect for the Des Plaines, Ill.-based American Society of Safety Engineers. Such injuries are difficult to mitigate, even with a good safety program, she added.
“We are seeing more soft-tissue injuries from an aging workforce,” Ennis said. “So even with a good, proactive safety program, if you have long-term employees you may be subject to higher claims loss and it’s not just frequency. It’s [also] dollars because a lot of these soft-tissue injures are expensive. “
An improving economy also drives claims as newly hired employees typically suffer a higher rate of injuries because of their lack of experience with performing certain tasks. Coupled with that, employers are increasingly hiring from among an aging pool of workers, Ennis said.
In contrast to an uptick in claims that certain specific employers may be experiencing, nationwide aggregate data shows that lost-time claim frequency dropped 2 percent during 2013, according to NCCI Holdings Inc., a Boca Raton, Fla.-based ratings and research organization.
An overall decline in worker injury has occurred over decades as workplaces become safer, although nationwide injury rates spike during certain years. Cumulative lost-time claim frequency dropped 58.3 percent between 1991 and 2012, according to NCCI.
For 2013, the 2 percent frequency decline falls within the NCCI’s estimate of a 2 percent to 4 percent average reduction per year.
For individual employers, volatility in accident frequency is common, and the overall nationwide frequency statistic that NCCI reports is an average. That means there will always be some entities experiencing claims frequency above the average.
When the nationwide average decrease is 2 percent, though, it would be typical for more individual employers to experience increases than if the nationwide average decline were, say, 4 percent or 6 percent.
“Modest increases in the rate of new hiring would mean that frequency would be falling a little less slowly than what we would see in the long-term trend,” said Harry Shuford, NCCI’s chief economist.
Stepping back from looking at the nationwide claim frequency data to observe individual employer or risk management pool experience, Ann Conway says that in general, she is seeing cases of claims frequency leveling off or “in some cases even slightly upticking.”
Factors responsible include changes in employers’ labor utilization and companies already having derived “an awful lot of value out of their risk mitigation” efforts, said Conway, director at Towers Watson in Boston.
“So on the aggregate [claims frequency] is clearly declining, but if you look specifically sometimes you will find increases or flattening,” Conway said. “The leveling off to the slight increases is in the more recent years, generally.”