Workers Comp Claims Departments – Gone So Soon?
Workers Comp claims departments felt the reduction in claim numbers for the last 20+ years. Any workers comp rate bureau – (NCCI, WCIRB, and others) has shown in webinars and reports that claim numbers have been shrinking steadily for the last 20 years at a 3.4% rate per year.
I have included this chart from NCCI over the years. Except for the 2021 pandemic anomaly, the number of claims fell yearly.
Does this spell doom for workers comp claims departments including the ones for Third Party Administrators? See below the chart for my opinion.
Severity and Workers Comp Claims Departments
When I spoke with rating bureau actuaries, the same topic frustrated me, but it was very true. The Workers Comp rating system always has a counterbalance somewhere in the mix. Severity has increased over the years as a type of counterbalance. As claim numbers have fallen, the workers comp claims average severity has increased somewhat proportionally.
The severity average of all rating bureaus came in at $45,000 per lost time claim in early 2023.
With the number of claims falling and the severity increasing, that means, in my opinion, that claims adjusters have become very specialized in their field. I often see where subrogation was not followed through in claims.
Handling more complex claims (with higher severity) means that the adjusters do not have to worry if the numbers are shrinking, as any experienced adjuster will tell you that claims have become more complex.
Even though workers comp claims have become more complex, a generalist will become more in demand than claims specialists. Handling General Liability and other casualty claim types will always guarantee you a place “at the table.” AICs and ARMs will become golden designations.
Bottom Line
The one unmentioned variable remains the recruiting of new adjusters. This has been an issue since I started in the insurance business long ago. The preceding link was an article that I wrote 10 years ago.
If new adjusters start increasing, then what will become of the Workers Comp specialists handling non-complex claims – something to think over during the holidays.
