This Is Actually Interesting if You’re An Actuary: Workers’ Comp Researchers Report Indemnity Costs Ticking Up
When a worker is injured, it’s imperative to ensure not only their full recovery, but that their claim is resolved in a timely manner. Timeframes on claims can be impacted by various factors, some of them dependent on the state’s workers’ compensation regulatory system.
In order to better illustrate the comparison of costs and other metrics across 18 state workers’ compensation jurisdictions, the Workers Compensation Research Institute (WCRI) recently released a new series of studies and research: “CompScope™ Benchmarks, 21st Edition.”
The purpose of the research is to evaluate how each state’s workers’ compensation system has performed, how they compare with the other states studied and their progress of change over time. Certain cost drivers and their effects on workers’ comp systems were also identified.
The report gathered data from program performance from 2014 to March of 2020 to determine how certain components, including overall medical payments, length of temporary disability and benefit delivery, impact expenses.
With the data from the studies, policymakers should have a better understanding of the effectiveness of a state’s workers’ comp program, thus providing a benchmark for future decision-making.
Additionally, the research results pointed out whether certain policy changes proved to have been effective over time. The report also incorporated the claims experience at the onset of COVID-19 in order to understand the pandemic’s impact on several facets of workers’ comp claims.
The Report By The Numbers
WCRI’s study looked at the following states: Arkansas, California, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Texas, Virginia and Wisconsin.
Each state study views a wide variety of components, including time from initial injury to the injured worker’s first indemnity payment, average cost per claim, average payment per medical care claim and average payment per indemnity benefits claim.
Findings that largely focused on costs per claim, include the following:
California: WCRI found that the total costs per claim that resulted in more than a week of lost time remained balanced since 2010. However, this metric increased by 4% in 2019, with the study finding a 6% increase in indemnity benefits per claim being a main reason.
Florida: Total costs per claim have been steadily increasing by 4% from 2014-2018. In 2019 and the beginning of 2020, the state saw total costs per claim rise by 8% , which was largely due to an increase in indemnity benefits and medical care payments per claim. Since 2014, Florida has had a quicker increase in costs per claim.
Georgia: While total costs per claim have stayed flat in Georgia since 2008, their metrics were higher compared to other states studied. The root causes of their higher costs per claim stem from indemnity benefits and expenses from litigation.
Illinois: In claim cases that resulted in more than 7 days of lost time, Illinois’ cost per claim has experienced an increase of 1-3% per year since 2012. Causes of this steady increase were found to be increases in claims’ medical payments, indemnity benefits and benefit delivery expenses.
Indiana: Total claims cost increased 3% every year from 2014-2019 in which more than 7 days of lost time was incurred. This increase is a response to several increased expenses, including medical, indemnity and benefit delivery costs. &