For workers' compensation insurers, costs are going up as the market shrinks, according to a recent report released by the National Academy of Social Insurance, observing they are fighting to pay more for smaller slices of the pie.

The number of employees covered by worker’s compensation decreased by 4.4% in 2009, the largest drop in such coverage in two decades, according to the report. Meanwhile, benefits coverage increased by 0.4%, which can be attributed largely to carryover from workers injured in previous years; specifically, benefits covered by private carriers increased by 0.3%.

The drastic drop-off in worker’s being covered reflects the heavy impact the recession had on employment in the construction industry, where worker’s comp is most likely to be incurred. According to the report, the 19% dip in employment suffered by the construction industry made it the “hardest hit industry” between 2008 and 2009.

Despite the dip in employment, the long-term coverage involved with worker’s compensation has left insurers on the hook. The percentage of benefits going to “permanent partial/permanent total and fatalities” cases (83%) far exceeds the actual percentage of such cases represented (38%), in terms of all worker’s comp claims.

Total cash benefits to injured workers and medical payments for their health care were $58.3 billion in 2009 compared to $58.1 billion in 2008, representing the 0.4% increase. From 2008 to 2009, medical payments covering injured workers decreased by 1.1%, as opposed to the private carrier coverage increase of 0.3%.

— Justin Stephani writes for Insurance Networking News, a SourceMedia publication.


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