Work comp’ declining frequency rate – will it continue?

The geekiest part of NCCI is the research workshop that takes place after lunch on the second day – you know the people attending are committed if they are in Orlando on a Friday afternoon listening to economists…

Harry Shuford discussed the “mystery of declining claim frequency”, an oft-described trend that some believe will end at some point while others think it may continue ad infinitum.

While there has been a cynical pattern over the last 90 years, the overall decline has persisted since 1926 (using manufacturing claim rates, the only ones that go back that far).  That said, the decline steepened after 1990 and has continued to this day, and it is consisted across all states, industries, occupations, demographics, affected body parts…

Why?

Harry and his colleagues looked at a lot of factors to determine their correlation with injury rates and similar data points.  The correlation isn’t due to the decline in manufacturing in the US; the decline has happened globally and across all sectors of the economy, not just manufacturing.  

Harry then showed a graph of international work-related fatalities (across 120+ countries) which showed a similar decline trend, with a bit of leveling in the late eighties followed by a steeper decline till 2006  and an even more rapid drop after that.  On average, there’s been a 4.3% annual decline over the last 30 years.

The death rate decline also mirrored the increase in per-capita income, albeit at a lower rate (3.6%).

And it was, if not entirely consistent, at least similar across geographic regions.

Net – two drivers: time, perhaps driven by pressures to improve productivity; and as a country gets wealthier, there’s a decline in the injury rate.

The takeaway – the trend has been in place for 80 years (at least) and will very likely continue into the future.

What does this mean for you?

Frequency will continue to decline.

 

2 thoughts on “Work comp’ declining frequency rate – will it continue?

  1. Joe, I trust your comment in the third paragraph about claim freqency trends was not what was meant. You wrote, “While there has been a cynical pattern over the last 90 years, the overall decline has persisted since 1926…..” I imagine you meant to say that the pattern is cyclical (but maybe not). Have a great weekend.

  2. Perhaps the drop in employment, especially in the labor and construction sectors, has a fair amount to do with a dropoff in workers’ compensation claims? I’m assuming (perhaps wrongly) that a decent portion of workers’ comp claims are from Americans who engage in physical labor for a living as opposed to the white collar, office-based workforce, though carpal tunnel and other office-related work injuries are a constant threat for those folks as well.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>