How Does a Recession Impact Workers' Compensation?

What impact does the current economic downturn have on work-related injuries? The National Council on Compensation Insurance, Inc. (NCCI) recently published a presentation by Martin Wolf, PhD, that examined the impact on workers' compensation during a recession. Wolf takes a historical look at the economic influences related to exposure, claim frequency, indemnity and medical severity and investment income.

The presentation offers the following key findings:

• Recessions tend to place downward pressure on exposure (payrolls) because of declines in both employment and slower growth (or declines) in wage rates
• The economy affects claim frequency largely through the experienced worker effect
• Indemnity severity is impacted by changes in wages as well as by how workers react to changes in economic conditions
• The average duration of prior recessions has been less than one year

View NCCI's presentation in its entirety.