Work comp claim frequency – pretty stable

After an increase in claim frequency in 2010 as the nation emerged from the Great Recession, the trend flattened out in 2011, as frequency declined by one percent – significantly less than the average over the last 20 years.
That’s the word from NCCI, who just released their annual update on work comp claim frequency. [opens pdf]
So, this means, what?
Depends on who you are.
Service companies – TPAs, managed care firms and the like – are glad it wasn’t a steeper drop in frequency, as claims volume drives their businesses.
Insurers are pretty much okay with the number – frequency drives cost and they need lower costs to return to some semblance of profitability.
Investors in the comp space – and these days it seems like every private equity firm in the country fits that description – have another number they can plug into their HP calculators to come up with financial projections for this deal or that.
Employers were likely looking for a bit more of a decrease, as it would have helped their rates and actuarial projections (reduced their WC exposure).
Since 1991, frequency has been cut in half – a remarkable achievement and one that looked like it persist for years to come. The flattening out of the rate of decline is likely driven by residual effects of the recession and its tendency to dampen claiming activity; can’t prove that but with jobs harder to come by and not a lot of hiring happening in many high-frequency sectors, seems logical.
As the economy picks up steam – if it ever does – we may well see another uptick in frequency due to more hours worked at a faster pace with less-skilled and trained employees.
Here’s hoping…

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