Little good news for Workers' Comp in recent reports

Claim frequency posts first rise since 1997

Prior to 2010, the frequency of Workers' Comp claims declined an average of 4.3% a year since 1990, with increases occurring only in 1994 and 1997. According to NCCI Holdings Inc. research, there was a 3% rise in frequency of lost-time claims during 2010. NCCI postulates that the increase could be due to several factors arising from the recession, including modest increases in employment (new hires generally file more claims than long-term employees), workers are less fearful of losing their job if claims are filed, and fewer return to work opportunities.

18% increase in First Half 2011 questionable WC claims

The National Insurance Crime Bureau recently released its first half 2011 questionable claims (QC) referral reason analysis. Overall, Workers' Compensation referral reasons increased by 18% from the 1st Half of 2010 to the 1st Half of 2011 after seeing a 7% decrease from 2009 to 2010. Inflated Medical Billing topped the list with an increase of 245%. While Duplicate Billing also showed a high percentage increase - 200%, the actual numbers are not high. The category, Prior Injury/Not Related to Work, which accounts for 18% of Workers' Compensation Referral Reasons, saw a 34% increase. Claimant Fraud, which accounts for 41% of the 1st Half 2011 Workers' Compensation Referral Reasons, also had a relatively high numerical increase from the 1st Half of 2010 to the 1st Half of 2011.

NCCI 2011 pharmacy study

Workers' Compensation medical costs per claim average more than $6,000 and soar to nearly $25,000 for lost-time claims. Among the findings of the NCCI report, Workers' Compensation Prescription Drug Study: 2011 Update are:

• per-claim drug costs grew 12% during 2009
• increases were driven more by a rise in utilization than by increases in the price of prescription drugs
• pharmacy accounts for 19% of workers' comp medical expenses, the highest percentage since NCCI started studying the issue
• OxyContin is now the number one drug
• Physician dispensing of drugs continued to increase in almost every state during 2009 and accounted for 28% of the dollar share of all prescriptions, up from 23% the prior year. In some states, including Florida, Pennsylvania, Georgia and Maryland, physician dispensing accounts for over one-third of all drug costs.

Less trust in management

The 2011 Employee Engagement Poll by Maritz Research, found that the American workforce is less engaged with its employers than it was in 2010, despite a slight improvement in business conditions.

Among the findings:

• Just 14% of respondents said they believe their company's leaders are ethical and honest.
• Only 12% believe their employer genuinely listens to and cares about its employees.
• Ten percent of employees said they trust management to make the right decision in times of uncertainty.
• 7% said that senior management's actions are consistent with their words.

Poor communication, lack of perceived caring, inconsistent behavior and perceptions of favoritism were cited by respondents as the largest contributors to their lack of trust in senior leaders.

Workers' Comp and other commercial insurance prices on the rise

Commercial insurance prices increased nearly 1.5% during the second quarter compared with the same period last year, according to the Commercial Lines Insurance Pricing Survey by Towers Watson & Co. This is the first time prices rose for all standard commercial product lines since the fourth quarter of 2003.

Workers' Compensation prices, continuing a trend of increases that began in the first quarter of this year, led the increases with a rise in the range of 1% to 5%. In addition, commercial property prices changed in the range of minus 1% to plus 3%. Prices rose the most in middle-market and large accounts, Towers Watson said.

In releasing the report, a spokesman noted that the third and fourth quarter indications would provide a more complete view of the industry's direction.