Sacramento Business Journal (01/25/12) Kelly Johnson
A new study from the Workers’ Compensation Research Institute concludes that the recession contributed to indemnity costs per claim in California growing faster from 2007 to 2009 than in prior years. Between 2002 and 2005, California’s indemnity costs per claim dropped almost 30% as a result of reforms. But the organization reports that costs per claim rose at an annual rate of 7% between 2007 and 2009, despite little change in the average weekly wage of injured California workers during that time. The average duration of temporary disability claims increased by one week per year during the recession, which drove much of the recent increase in indemnity costs.
WCRI says the data is possible evidence that the recession had an impact on workers’ compensation costs. “During a recession period, one would typically expect to see slower wage growth, slower return to work (because there are fewer jobs available due to higher unemployment rate), and more incentive to settle cases for both parties because of greater uncertainty regarding the future,” the report states.
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