Boca Raton, FL – NCCI recently announced the release of a new report, Workers Compensation Excess Loss Development, which examines development patterns by size of loss.
The brief is an update to the prior NCCI studies, completed in 2007, 2011, and 2016. An additional four calendar years of large loss experience are added to the most recent study.
- Enhanced visualization techniques
- Reviews of claim closure rates for different sizes of loss across a broad accident years and maturities
- Cumulative excess loss and excess claim count development factors through development year 35 for a variety of excess layers.
Key Findings included that for large claims reported to NCCI in Financial Call 31 (Large Loss and Catastrophe Call) during the time period studied and development through 35 years:
- The development of case-incurred loss amounts, paid loss amounts, and claim counts varies significantly by loss size and development year
- Claim counts for larger losses are identified quickly and reported faster than those for smaller losses
- Claims with case-incurred losses less than $5 million generally developed upward, while claims with case-incurred losses in excess of $7 million generally developed downward
- Claims with case-incurred losses between $5 million and $7 million generally developed downward during earlier reporting periods and upward during later reporting periods
- On average, the loss cohorts (groups of similarly sized claim amounts) observed in this analysis experience upward development in later development periods
- Smaller claims tend to close faster than larger claims
- For Florida, claims under large deductible policies had significantly more development in the excess layers than claims under other policies (i.e., guarantee cost and small deductible)
*Note that in the context of the paper, “smaller losses” is a relative term as it refers to claim amounts reported on NCCI’s Large Loss Call 31, where the case-incurred value of every claim is at least $500,000.
Read the full report: NCCI: Workers Compensation Excess Loss Development (PDF)
NCCI is also hosting a webinar to review the findings. Register here: NCCI: Large Loss Behaviors Webinar