Annual Decline in Workers' Comp Claims has Stopped

Tuesday, December 21, 2010 | 0

By Zachary Sacks
Sacks & Zolonz

For the past several decades, employers have benefitted considerably from a steady annual decline in the frequency of workers' compensation claims. How? A decline in the frequency of claims meant fewer injuries, which translated into a safer, more productive workforce, as well as lower overall workers' compensation costs.

Unfortunately, insurance analysts and industry experts all seem to agree that this annual trend of a decline in the frequency of workers' compensation claims may have finally have come to an end or "flattened."

Experts identify our nation's poor economic climate as the likely reason for this leveling off in the decline of workers' compensation claims.

Specifically, tough economic conditions forced employers to 1) divert funds from employee safety programs that could otherwise help reduce the frequency/severity of work injuries and 2) hire inexperienced employees who are more susceptible to accidents in the workplace.

Why then is this flattening in the frequency of workers' compensation claims so significant?

The steady annual decline of workers' compensation claims - estimated to have been as much as four percent a year served to keep work comp insurance rates lower and offset the incurrence of workers' compensation-related expenses.

It is worth noting, however, that these same insurance analysts and industry experts are unsure if the flattening in the frequency of workers' compensation claims is permanent.

It's "too early to determine whether this indicates a reversal in the long-term trend that has occurred since the 1990s, a floor on frequency that will remain for the foreseeable future or a temporary pause in the long-term downward trend," said Glen Pitruzzello, vice president of workers' compensation claim practices for the Hartford Financial Services Group. "However, given the conventional wisdom that newer, lesser-experienced workers tend to have a higher incidence of workplace injuries, this could be an early indication of a strengthening job market and an improving economy."

Fortunately, there are still steps that an employer that is experiencing a higher frequency of workers' compensation claims can take.

For example, when Select Staffing Inc., a Santa Barbara-based organization that supplies temporary employees, began to see the number of workers compensation claims rise, they started executing additional safety measures/programs. As a result, the frequency of workers' compensation claims declined by roughly 10%.

"I would say that [the frequency of our claims] is feeling pretty flat now," said company president Fred Pachon.

Consequently, the reintroduction of safety programs/measures may prove beneficial for California employers.

Zachary Sacks if a founding partner of Sacks & Zolonz, a Southern California workers' compensation defense firm. This column was reprinted with his permission from the firm's blog, http://www.californiaworkerscompensationdefenseattorneys.com/