WCIRB: Continued Increase in California Claim Frequency

Workers’ compensation indemnity claim frequency in California has continued to rise unlike in most other states, according to the California Workers’ Compensation Insurance Rating Bureau.

The WCIRB recently issued an update to its Analysis of Changes in Indemnity Claim Frequency report, which was originally published in 2012 and last updated in December 2013.

In prior reports, WCIRB researchers explored potential causes for the increases in claim frequency in California that have persisted since 2010 and that differ from the claim frequency experience of other states.

Prior reports have identified a number of factors influencing claim frequency including increases in cumulative injury claims, increases in smaller non-cumulative injury claims that may have been reported as medical-only in the past, increases in the proportion of indemnity claims relative to total claims, and increases in late-reported indemnity claims and the proportion of medical-only claims that later transition to indemnity.

In this latest update, WCIRB researchers studied the influencing factors driving recent claim frequency based on the most up-to-date data available.

The WCIRB’s findings include:

• Unlike in most other states over the last several years, California indemnity claim frequency has continued to increase as data currently increases of 3.2 percent, 3.9 percent and 0.9 percent in 2012, 2013, and 2014 respectively.
• The number of late reported indemnity claims continues to increase, whereas the percentage of medical only claims reported after 18 months has generally remained stable since 2007.
• The level of cumulative injury claims has continued to increase. Roughly 13 percent of indemnity claims are estimated to involve a cumulative injury in 2013 compared to roughly 8 percent in the 2005 to 2007 period.
• The growth in cumulative injury claims beginning in 2009 has been concentrated in claims involving more serious injuries and multiple injured body parts.
• Based on WCIRB surveys of cumulative injury claims, both the proportion of cumulative injury claims involving multiple insurers and the proportion involving attorney representation has increased in recent years.
• Shifts to a less hazardous composition of industries in California, called “industrial mix,” have historically driven claim frequency downward. The recent economic recovery in higher hazard industries such as construction and manufacturing has had the opposite impact. In 2013, rather than dampening claim frequency, shifting industrial mix is increasing claim frequency by approximately 1 percent.
• The 2010 increase in frequency was greatest in industries that were most impacted by the recession, like construction and real estate.
• The 2010 indemnity claim frequency increase was generally experienced across all California regions. Since that time, the increases have been concentrated in the Los Angeles area. Indemnity claim frequency rose an estimated 9 percent in the Los Angeles Basin region from 2010 to 2013.
• As the economy recovers, newer workers enter the system and are often more likely to be injured on the job than more experienced workers. The proportion of injured workers with less than 2 years of experience at their current job has grown by 8% from 2010 to 2014, suggesting the economic recovery is a significant driver of recent claim frequency increases.