Somebody has some ‘splainin to do.

Claims were up less than 5%, while claim costs increased 29%.

That’s what’s been happening at North Dakota’s state work comp fund, aka WSI as published in their biennial report (note the time period referenced above is FY 2012 and 2013). Fortunately, premiums have been increasing rather dramatically as well, which should help address those rapidly escalating claims costs.

On the downside, the oil patch is suffering from declining prices and slipping employment, which means lower payroll and lower premiums going forward.  If claims costs continue to escalate while premium growth subsides, things are going to get a bit tight in Bismarck.

But let’s not ignore the differential between claim frequency and claim severity.  The biennial report doesn’t indicate much change in the type of injury, so it’s not clear what is driving the big jump in severity.

And the biennial report is all smiles, and precious little discussion of this rather shocking metric.

There’s also a $15 million hit due to WSI’s technology debacle; that’s a pretty substantial contributor to WSI’s “decline in net position” despite a 20% jump in premiums year over year.

So what does this all mean?

Here’s what’s scary.  Claim severity increased a lot, and claim frequency popped up just a bit.  If there are more job cutbacks in the Bakken oil fields, we may see more workers filing comp claims rather than suffer thru a layoff.  And, with fewer jobs to return to, disability duration is likely to increase.

What does this mean for you?

These are very nervous times for WSI.  And based on past experience, it doesn’t look like senior management is up to the challenge.

hat tip to WorkCompCentral for the head’s up!

 

 

One thought on “Somebody has some ‘splainin to do.

  1. Hi Joe, great post, however some very troubling statistics here. There seems to be a correlation in the increase of claim severity vs the increase of premiums… go figure!

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