Quick takes from NCCI Insights Symposium and RISKWORLD conference

According to a recent report, The Hartford's 2025 Risk Monitor, business leaders ranked cybersecurity, economic trends, and worker safety as their top three concerns impacting operations and future growth. Two recent events, NCCI's Annual Insight Symposium and the Risk Management Society (RIMS) RISKWORLD provide valuable insights into the work comp issues concerning stakeholders.

NCCI Annual Insights Symposium

Claim severity rises while claim frequency declines

Workers comp claim frequency continued to decline last year, falling five percent but medical claim severity increased six percent and indemnity claim severity increased six percent in the 38 states where NCCI provides rate-making services. Indemnity trends are in line with wage inflation.

Increases in medical claim severity driven by increased utilization and changing treatment patterns

More than one-half of benefit costs are medical care (53 percent). Injured workers seek care earlier and receive more medical care. From 2023 to 2024 there was a seven percent increase in physician visit costs per claim. Major surgeries and physical medicine, such as physical therapy visits, increased significantly. On a positive note, opioid prescribing, along with the entire comp drug spend, has declined. Yet, costs for expensive topical drugs,while a small fraction of pain-management costs have risen threefold. Expensive GLP1s and other weight-loss treatments generally have not been used in worker comp claims.

Raji Chadarevian, NCCI executive director of actuarial research, noted the changing treatment patterns - more dependence on physical medicine and less on medication - are likely to continue. Best practices now focus more on individual results and early pain resolution.

Trends differ by industry

Construction - Frequency has continued to decline, largely driven by fewer strain injuries. The biggest driver of frequency in construction remains slips and falls. The industry continues to rank first in premium share, despite ranking fourth in payroll share.

Healthcare - Healthcare claim frequency (excluding COVID-19 claims) generally declined from 2015 to 2023, driven by a nearly 30 percent reduction in strain-related injuries. However, the decline was flatter in the past year.

Leisure & hospitality - Claim frequency for restaurants declined in 2022 and 2023, while frequency for other sub-sectors has remained flat. Slips, falls, and strains are the most common injuries, with burns and cuts also prominent in restaurants.

Office - The shift to remote work since 2020 that led to a decline in claim frequency continues.

Manufacturing - Frequency in manufacturing has dropped thanks to flattening employment growth, lower turnover, and technological improvements.

Private education - The only industry to experience rising frequency, private education has seen a significant increase (one in five claims) in "struck or injured by" injuries, which include kicking, stabbing, and biting by students. This suggests an alarming workplace violence issue.

Transportation - While during the pandemic, there was a rise in frequency largely related to the courier and delivery category, last year frequency was flat, partially due to a decrease in labor turnover.

Motor vehicle accidents climb and are the most expensive type of claim

The leading cause of workplace fatalities, motor vehicle accidents (MVAs) cost over 70 percent more than the average claim and are a growing share of claims over $1M. Almost one-half are due to collision or sideswipe with another vehicle, and one in four are subrogated. While MVAs represent five percent of loss-time claims, they represent 10 percent of lost-time costs.

Frequency has not improved since 2012. One bright spot is the trucking industry, which has experienced consecutive declines in accident frequency. Some potential contributing factors include successful implementation of technology, such as dash cameras, regulations addressing driver fatigue, and enhanced focus on overall safety.

Outlook for workers compensation cautiously optimistic

Workers compensation remained healthy and profitable in 2024 with a combined ratio of 86. However, the increase in claim severity, adjustments to medical fee schedules, economic uncertainty, and the potential impacts of tariff and immigration policies could change the outlook.

Get more details: Annual Insights Symposium (AIS) Highlights Report

RISKWORLD

Aging workers driving up claims

According to data from Sedgwick Claims Management Services Inc., workers 60 years and older had the highest increase in overall new claim volume each year between 2020 and 2024. The average indemnity duration for older workers is nine days longer than that for younger workers costing 35 percent more in both income replacement and medical costs.

Shifting demographics are the root cause - Bureau of Labor Statistics data shows employment projections for 2023 to 2033 include a 22.4 percent rise in workers aged 65 to 74 and a 79 percent increase in workers older than 75. Muscle and skeletal injuries are common, and comorbidities such as diabetes and obesity can delay recovery.

Panelists noted that early intervention using AI and other technology to improve data gathering, accurate diagnostics, and claims management can help reduce claim costs.

Early intervention key to reducing costly mental health claims

Mental health claims represent two percent of total claims in workers compensation but cost 3.5 times more and last over 3.5 times longer than nonmental health claims. Such claims lengthen the time of disability and often require a change in the medical care plan. While coverage varies by state, claims are rising on both mental health injuries that coincide with a physical injury and primary mental health injuries. Involving behavioral health specialists early in the process is key - if within the first 90 days there is a 40 percent reduction in days off work.

Improving safety with technology

Technologies that have shown significant potential to reduce safety risk include AI-powered imagery to spot potential hazards, telematics data to enhance fleet and equipment safety, environmental sensors that detect machines nearby, and wearable smart sensors to monitor worker wellness, work pace, location, and use of PPE.