NCCI report notes various impacts of recession on workers' comp

Workers' comp payers are funding temporary total disability benefits longer, according to new research from the National Council on Compensation Insurance. Experts say that is likely due to the economic recession.

"We think one of the contributing factors is that there are less return-to-work opportunities, especially with temporary claims," said John Robertson, NCCI director and senior actuary. "With less return-to-work opportunities, we think people are having to stay out on workers' comp longer in some of these cases."

At the same time, the number of workers' comp injuries continues the downward trend begun nearly two decades ago.

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"Preliminary results indicate a decline in claim frequency of 4 percent for 2009," according to an NCCI research brief. "This is on the heels of a 3.4 percent drop in 2008 and extends a downward trend that started in 1991."

The report, Workers Compensation Claim Frequency Continues to Decline in 2009, says the decline in frequency continues to be widespread and was observed for all industries, geographic regions, and employer sizes, as well as for most claim types.

Additional observations include:

Among specific parts of the body, lower back injuries exhibited the steepest frequency decline over the latest five years, although they continue to represent a relatively large share of injuries.
In terms of the nature of injury, sprain/strain claims show a significant decline, as does carpal tunnel syndrome -- down 46 percent.
Since 1990, injury rates have dropped nearly 55 percent.
Average medical costs in workers' comp increased by 5 percent in 2009, the lowest increase over the latest 15-year period. The increase is higher than the medical Consumer Price Index, although Robertson pointed out the medical CPI measures only changes in costs of services and not the number of services being offered.

The future. NCCI warns that frequency can increase during economic recoveries due to the influx of inexperienced workers. "Even if they've been experienced at another job or in a different location, they are doing something a little different," Robertson said. "Their surroundings are not as familiar."

For the immediate future, NCCI expects frequency to continue its downward trend. "Given the continued weakness of the labor market, it is likely that claim frequency will continue to decline in 2010," the report said. "NCCI research indicates that economic recessions typically put additional downward pressure on claim frequency . . . there is less job creation, which translates into a more experienced, and thus less accident-prone workforce."

Read more at the WorkersComp Forum homepage.

December 9, 2010

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