The survey, the 2008 Wausau Multiline Productivity Poll, was put out for the fourth year by the middle-market-focused, property/casualty-writing member of the Liberty Mutual Group.
Out of the 255 financial executive who responded to the poll, about 23 percent said they feared the recession would actually cause an increase in their workers' comp claims. Turns out, that seems to be the logical assumption when it comes to economic downturns, but the true trend is then counterintuitive. More on that in a bit.
Another 62 percent of respondents said that no change would occur in their workers' comp claims. You always also have to have the "don't know" respondents--those added up to 9 percent of the total.
And then there were the 6 percent of respondents who get it--who said that they expected their comp claims to drop.
What do they get? The long-term relationship between recessions and comp claims, according to the National Council on Compensation Insurance Inc., which is based in Boca Raton, Fla.
NCCI has deduced this trend from analysis of 50 years of data, something Chief Economist Harry Shuford has done since 2000.
"The simplest explanation that we find is that it is fairly clear that newly hired workers have a much higher risk of workplace accidents and injuries. And this is clear from data that is available from the Bureau of Labor Statistics," Shuford told Risk & Insurance®.
In short, during bad times, employers aren't hiring these "newly hired workers," or they've just been laid off, so they're not around to get injured.
This simple fact can evoke some skepticism. Shuford said it took serious work on his part--showing how the trend holds out across fix or six recessions and five or six expansions--before the workers' comp community bought into it.
But still today, people have doubts. Shuford didn't name names, but he recalled a recent presentation he saw by a "highly regarded insurance economist" who said that he expected comp claims to increase in number with the upcoming recession.
"It just seems so logical that that's what would happen, people just believe it, but it's one of those examples of places where intuition often is wrong," said Shuford.
Shuford sent the other economist an article from the 1990s that backed what NCCI has found. He's also uncovered research from the 1940s demonstrating the same thing.
Recessions tend to also affect claims severity by flattening it out, added Shuford. In good economic times, average weekly wages grow more rapidly. Vice versa in not so good times. Healthcare costs and their influence on severity, on the other hand, do not appear to be moved by the economic cycle.
Read more on Shuford's workers' comp claims research here.
MATTHEW BRODSKY, senior editor/Web editor
September 1, 2008
Copyright 2008© LRP Publications