Workers’ compensation has experienced a long-term decline in overall claim frequency, in part due to automation, robotics and continued advances in safety as contributing factors, the National Council on Compensation Insurance (NCCI) reports. While total claim severity has increased, frequency declines have generally outpaced severity.
This industry is not like the other
The cumulative changes over the period in frequency and severity differ by NCCI’s major industry groups: Manufacturing, Contracting, Office and Clerical, Goods and Services, and Miscellaneous.
For frequency, the Miscellaneous industry group had the smallest decrease while the Office and Clerical industry group had the largest decrease. For severity, the Contracting industry group showed the largest increase while the Miscellaneous industry group had the smallest increase.
How exactly is claim frequency defined?
Generally, the term refers to a ratio of claim counts to a selected exposure base during a specified period. But there can be several variations.
Claim counts can refer to indemnity claims, medical-only claims or both; claims can be aggregated by accident year, policy year or something else; and claims can be subdivided by state, class or type of injury, among other factors.
NCCI monitors trends in workers’ compensation loss drivers, both on a countrywide and individual state basis. Detailed reports on its findings can be found on the company’s website.