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National Academy Of Social Insurance – Employer Cost WC +7.1% 2011

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National Academy Of Social Insurance  (NASI)

The NASI takes on a monstrous task every year of attempting to make sense of Workers Comp data on a national basis.

Graphic Stethoscope NASI With Dollars
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 NASI’s recent report and press release basically had a misleading headline that Workers Comp costs increased due to an economic recovery.   That is not really included as an outstanding component of their underlying study.The NASI report indicated the increase was due to increases of:

  • 4.5% in medical costs
  • 2.6% in cash benefits paid

The NASI drew data for 2011 from many sources – mainly

  • Bureau of Labor Statistics (BLS)
  • NCCI – 28 states
  • WCIRB – California
  • Best’s Ratings

The economic growth theory was checked against NCCI’s State of The Line and WCIRB’s recent reports on % premium growth.   Please note the PDF files will take a few moments to download.

NCCI’s State of The Line, which everyone involved in WC should read, mentions nothing about an economic recovery as the reason for an increase in employer costs.   A very similar figure to NASI’s report can be found by adding the medical severity cost to the indemnity increase.  Both of those figures totaled to 7.5%.  

Hand Holding Market NASI Illustrating
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The WCIRB also did not mention an improving economy as the reason for the increase in the employer costs of Workers Comp for 2011 in California.  The extrapolated figure for CA from the WCIRB’s numbers was approximately 5%. 

 

The BLS figures were not examined as their history of multiple revisions would not help.   A.M. Best was not researched for data.

After reviewing the NCCI and WCIRB data, the reason for the increase in employer costs had very little, if any, due to an economic rebound.  Instead, the increase in medical costs in 2011 seemed to be the main reason for the increases.

The one very tough task the NASI undertook was converting Total Incurred (Paid + Reserve) to paid-only figures.  This would have been a very difficult task.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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