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…
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.