Opinion | ‘Good News’ in Workers’ Compensation? Hard to Come By, But Here It Is
Workers’ compensation suffers from an image problem. As a form of social insurance dating back a century in the United States, our victories are numerous — every person who was injured at work and made whole owes something to the concept.
However, as an industry that straddles the esotericism of insurance programs and the health care system, workers’ compensation is an easy target for criticism and negative media coverage.
Industry award programs such as WorkCompCentral’s CompLaude awards and Risk & Insurance®’s Teddy Awards are moving the needle in terms of public understanding of what we do, but such recognition remains the exception rather than the rule.
Workers’ comp professionals are grinding it out every day, striving constantly to improve, and most of what they do goes virtually unnoticed. And that’s a shame, because the more light we can shine on the good news about workers’ comp, the easier it will be to build trust with employees and other stakeholders.
One bright spot worth touting? A steady decline in injury frequency across the board — 30% since 2006 according to NCCI.
NCCI’s April 2019 report, The Modern Worker and On-the-Job Injuries: How Changing Employee Demographics Affect Claims Frequency, offers a good primer of how workers’ compensation has responded to decreased injury rates and the demographics that underpin this. Also, importantly, it provides data to support continued loss control and safety efforts through workers’ compensation.
“Frequency” as defined by NCCI is a measure of the ratio of claim counts to a selected exposure base during a specified period. Exposure base could be payroll, premium, policy counts or the number of workers.
While some of the reasons that have resulted in a long-term decline in frequency are macroeconomic and potentially devastating to some sectors — like automation — others are the result of a concerted effort by dedicated professionals — safety and loss control.
According to the report, several key demographic shifts have occurred between 2006 and 2017 (the latest year for which Bureau of Labor Statistics data is currently available).
- The workforce is getting older. Workers over the age of 55 have doubled since 2000, while workers below this age threshold have stayed about the same.
- Women now make up 47% of the workforce, and women have lower injury rates than men.
- Service sector employment, which has low injury rates versus the goods producing sector, is continuing to post huge gains.
Despite these demographic shifts, which do naturally affect frequency, NCCI concludes in its analysis that:
“Demographic change does not explain declining injury frequency during the past decade. For the period of this study since 2006, incidence rates have declined 1% to 4% annually (usually 2%–3%) across‐the‐board for all worker demographic categories and for all three of the most common causes of injury. Frequency decline is mainly the result of lower incidence rates for all workers, not the result of changing workforce demographics.”
To extend this analysis then, if the fact that workers are older, more likely to be female, and employed in less injury-prone jobs doesn’t explain the decline in frequency we’ve observed since 2006, it is within the realm of possibility that the workers’ compensation industry and its efforts to mitigate injury rates could be the main driver of these lower incidence rates.
Most workers’ comp carriers have departments dedicated to rooting out safety lapses in the businesses they insure, which in turn empowers business owners to stop claims and lower their premiums.
While we won’t know the next piece of the puzzle until later this year when the Bureau of Labor Statistics releases its 2018 Injuries, Illnesses and Fatalities data, I think it’s safe to say that we owe ourselves a cautious pat on the back for preventing life-altering work injuries.
Indeed, any police department could tell you that you don’t get credit for prevention. But without it, we’ll have fewer of the “good” kind of claims — the ones that never happen. &