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Big things that affect work comp

Perhaps the biggest factor driving workers’ comp is the economy, and more specifically employment trends.

In a down economy, payroll declines, claims cost increase, and it’s harder for recovering workers to find new jobs, resulting in longer disability duration. The result – lower total premium dollars and a challenging claims environment.

In an up economy, there are lots of jobs looking for workers, payrolls are up as employers have to pay more to get and keep workers, and it’s therefore easier to place recovering workers.  Plus premiums are up as payroll is higher.

We are now enjoying the classic “up” economy. While there are spots where the economy is not booming, overall things are pretty good in most places. And, the latest data is even more encouraging.

We are near a 16-year high for job vacancies at 5.6 million.

540,000 jobs were added in June and July, and unemployment is at 4.9 percent.

Wage growth is finally showing some movement, with BLS reporting private industry workers compensation over a rolling-twelve-months up by 2.6 percent last week.

This isn’t a post about who created what jobs, or who gets credit or blame, its about workers’ comp and what drives the business.  And right now, with comp carriers enjoying a string of financial success that’s all but unheard of in our industry, it’s good to know the macro factors out there are generally pretty positive.

What does this mean for you?

Good news until the pricing wars hit.

2 thoughts on “Big things that affect work comp”

  1. In this Sunshine state it is getting even more interesting. With recent FL Supremos and Fla. Dist. Ct. App rulings it is getting rather sporty to say the least. Wish we could say the counter balance was for the best. However the smart money flowing in here may say the opposite. DePaolo would be appalled!

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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