?Surprise': Smaller Comp Claims Drop

Mr. DiDonato said he had no hard data and could only speculate on what the reasons for the small claims decline might be. Among the factors that might be in play, he said, are loss control efforts by employers and carriers that are successful in eliminating the smaller accidents from occurring and an emphasis on getting employees back to work more quickly.

He said he would tend to discount the numbers being much affected by anti-fraud activity. Perhaps that might be a factor he said, "If you want to speculate that fraud is more prevalent with small claims, but I would think it would go the other way and involve big dollar items."

Mr. DiDonato's report also said that medical and indemnity costs for comp continue to rise?somewhat offsetting positive news regarding the reduced number of claims.

Other general data in the report included findings that every major industry had declines of at least 30 percent, every major occupation group had declines of at least 30 percent, every major age group had large declines, generally greater than 20 percent and both male and female workers exhibited declines in excess of 30 percent.

Among the classes showing the greatest declines in injuries were hotels, at 25 percent, and wholesale stores, 24 percent.

Mr. DiDonato said he believed hotels had achieved some of their improvements by reducing the weight load carried on the supply carts that housekeeping staff use.

The report said that after adjusting claim size for the impact of inflation over time, the following changes resulted for lost-time claim frequency between 1997 and 2001:

? For claims less than $2,000, a decline of approximately 35 percent.

? For claims between $2,000 and $10,000, a decline of 18 percent.

? For claims between $10,000 and $50,000, a decline of 8 percent.

? For claims more than $50,000, a decline of 8 percent.

In addition to examining claim frequency by size of claim, NCCI said it has updated prior analyses that examined claim frequency by injury type and by occupation. Consistent with prior studies, all injury types, whether minor or severe, experienced significant declines.

"There's across-the-board improvement regardless of how the data is sliced," said Mr. DiDonato.

NCCI said that among the many factors it believes are driving the long-term trend of decline are a continued emphasis on workplace safety in all employment classes, increased use of robotics, increased use of modular design and construction techniques, increased use of power-assisted processes, advances in ergonomic design and greater use of cordless tools.

But the report found significant increases in both the average indemnity and average medical cost of a claim over the last several years. One part of this increase, NCCI said, is due to the relatively greater percentage decline in small claims versus large claims over this time period.

"The change in the average cost of workers' compensation indemnity claims has continued to increase in the last few years. This followed a period, from 1990 to 1995, when the average indemnity cost was relatively stable," said Mr. DiDonato.

"The flat severity trend during that stable period was mainly a result of the industry's substantial reform/cost-containment efforts in the early 1990s. The last seven years have seen the trend turn upward once again, with workers' compensation indemnity claims increasing an average of 7.4 percent annually since 1996. In 2001 and 2002, respectively, claim costs rose 7.3 percent and 6 percent."

NCCI called the medical claim cost trends today "alarming, with double-digit increases the last two years. In 2001, medical severity increased by 12 percent, and in 2002, medical costs rose an additional 11 percent. Utilization, including the increased use of prescription drugs, is a major driver of this increase."

Mr. DiDonato said that the small claims drop explains the continuing phenomenon of an increase in the figure for average indemnity and medical cost claim. If more smaller claims are removed, the average claim size will increase because it skews towards larger claims, he related.

NCCI data is available at ncci.com.