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|Workers’ Compensation Indemnity Claims Frequency Rose In The Year 2020|
By Lonce Lamonte, editor, adjustercom - July 23, 2021
Workers’ compensation claims frequency rose with California’s private self-insured employers in the year 2020. There was an increase in indemnity claims accompanied by a decrease in medical-only claims according to a report from the California Workers’ Compensation Institute.
The Office of Self-Insurance Plans complied data from the year 2020 and the California Workers’ Compensation Institute (CWCI) conducted an analysis. The Office of Self-Insurance Plans annual summary of private self-insured data provides a snapshot of California private, self-insured claims experience for cases reported in a given year, including the complete number of covered employees, medical-only and indemnity counts, and total paid and incurred losses on those claims through year-end.
The latest summary shows the experience of private self-insured employers who covered 2.34 million California Employees last year. They reported a total of 86,503 claims in 2020 just up from 85,852 from the 2019 report, according to CWCI.
In the private self-insured sector, the number of covered employees throughout the pandemic held steady while statewide unemployment soared. That’s because many large, private self-insured employers fit into the “essential worker” category. Outside it the insured work-force was hit more by furloughs, layoffs, and downsizing according to CWCI.
The California Workers’ Compensation Institute reported that the Office of Self-Insurance Plans reported private self-insured experience for 2020 showed 43,779 medical-only claims (down 15.1% from 51,545 claims in 2019) and 42,724 indemnity claims (up 24.5% from 34,307 in 2019).
“The 2020 claim count translates to an overall frequency rate of 3.70 claims per 100 private self-insured employees, nearly matching the overall frequency rates from 2018 and 2019, though the breakdown by claim type underscores the major shift in the claim distribution away from less costly medical-only claims and toward more expensive indemnity claims,” the CWCI report states. “While medical-only claim frequency per 100 employees fell from 2.21 in 2019 to a 15-year low of 1.87 in 2020, the indemnity claim rate rose from 1.47 to a 15 year high of 1.83.”
Paid losses on the 2020 private self-insured claims through the fourth quarter totaled $268.4 million, $15.6 million more than the comparable figure for 2019, as total paid indemnity rose by $25.1 million while total paid medical fell by $9.5 million.
Total incurred losses rose to $742.4 million, up $48 million from the initial incurred amount reported for 2019 claims, as total incurred indemnity at the first report climbed by $40.2 million and total incurred medical increased by $7.8 million, according to CWCI.
“Average paid and incurred losses in the initial report both rose sharply in 2020, climbing to $3,103 and $8,583 respectively, with all of the year-over-year increase in the average paid amount and most of the increase in average incurred due to increased indemnity.”