Frequency Downturn Should Not Cause Workers Comp Claims Adjuster Reductions
Every year for the last 20+ years, Workers Comp claims adjuster reductions have been recommended by pundits and prognosticators in the insurance press.
What one does not see from an insurance carrier, or Third Party Administrator initiates a reduction in adjuster numbers because claims frequency reduces every year. Why?
Every time a study or article mentions a frequency downturn, a few pundits think that claims staffing and support services can or should be reduced to match the downturn. Recently, the BLS showed that on the job injries and illnesses reduced by approiximately 3%.
The question posed was “Why would TPAs and insurance carriers still invest in keeping their claim staff at the same levels when the number of injuries does not justify the same levels.
The discussion boards have shown the answer in a few places, and I wanted to repeat it here. For reference, check out this severity chart comparison from NCCI AIS 2025. The unadjusted frequency almost matched the severity exactly.
In Defense of the Workers Comp Claims Adjuster Numbers
The answer was obviously that a claims severity increase has always matched the downturn in frequency.
Many articles cover severity on this website. See a listing of the articles here.
NCCI presents complete sections in its Annual Insights Symposium on this phenomenon. The claims complexity syndrome occurs every year. See below. Medical severity grows every year.
_______________________________________
Navigating Medical Severity and Claim Outcomes
Tuesday, May 12—3:30 p.m.–4:00 p.m.
Raji H. Chadarevian
Executive Director—Actuarial Research, NCCI
Medical severity is more than a single metric. From utilization growth to pricing dynamics, this session offers a roadmap for navigating complexity and how utilization can drive outcomes.
_______________________________________
Workers Comp claims adjuster reductions would only exacerbate the problem. The answer to the “Why not?” posed earlier means two things:
- Claims are becoming more complex, resulting in higher severity levels
- The claims loads then need to be reduced to match the severity and complexity
Claims processing and claims adjusting are comprised of two different sets of tasks. Yes, if Workers Comp claims were just processed and paid, then the Workers Comp claims adjuster reductions would be justified. The main concept here remains, as it has for the last 20+ years, that claims are adjusted, not processed.
I will not go into the steps in the Workers Comp claims adjusting process. Many articles appear on this website that cover it well.
The Math
Let us say that adjuster Joe has 200 claim files with a reserve of $50,000 = $10,000,000. Due to the medical complexity of the new incoming claims, the claims that still remain open are now $75,000. The number of Joe’s claim files reduces byover 10% total in three years to 175 claims.
The math comes out to Joe now handling. $13,125,000 in reserves with what appears to be a smaller claims load. Should Joe be given more claims to reach back up to the 200 claims level? Probably not.
If the Claims VP considers a workers comp claims adjuster reductions or support staff, where would those claims go? Yes, the total claim tally for Joe decreased by 12.5%. In the year past, the number of claims might have justified adding more claims or reducing staff. Now, the reserving comes into play.
See the bottom of this article for a pic of Joe if his claims count is increased back to 200 complex claims. If you have ever adjusted claims, we all have been there at some time or another.
In other words, in many years past, Joe would have had claims added to his claims load to bring the level of the number of claims back to 200. If the claims adjusting office had 10 adjusters with claim counts similar to Joe’s, would the Claims VP reduce the number of adjusters to eight? Possibly in the old days, but not now with the medical and other claim complexities. The Workers Comp claims adjuster reductions are not justified presently.
