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An international analysis of workplace injuries
Al-Amin Ussif
Declines in incidence rates for occupational injuries in the United States during the 1990s have presented economists, actuaries, and insurance executives with the difficult task of trying to explain the causes. According to Poteet and Didonato, employment is often associated with new or inexperienced workers who might be expected to have higher injury rates.1 Nonetheless, counter forces are at work, leading to unprecedented and sustained improvement in workplace injury rates. Understanding what drives this improvement is a key to sustaining this good news. The decline in workplace injury rates during the 1990s is the longest in the history of workers compensation insurance in the United States. Conway and Svenson describe the recent decrease as dramatic, in light of the expected pattern on increased injuries during economic expansions.2 Such a decline appears not to be confined only to the United States, but also to many other countries in Europe.
Previous studies have focused on the impact of the business cycle on Workers’ Compensation claims.3 Frequency of such claims measures the number of injury or claim4 counts per an exposure base. That number is expected to rise during an economic expansion and accordingly fall during a contraction or sluggishness.5 Recent studies have shown that changes in incidence rates are significantly correlated with annual changes in economic variables such as aggregate employment.6
This article consists of a twofold focus. First, it investigates the impact of employment on injury counts in the United States, Canada, France, Finland, and Sweden, using both qualitative and analytical tools. These countries are chosen because of their data availability. And second, it introduces a measure of the aggregate effect of all factors that tend to mitigate workplace injuries and illnesses. Also, this article defines and estimates a new quantity called the "risk-to-safety ratio" and uses it as a criterion for ranking or grouping the countries. The basic idea is to derive an index that can be used to compare and contrast, for example, different occupations in terms of their performance in safety and risk. This index may be helpful to actuaries, insurers, and even regulators, because it would provide a better understanding of the risk that is being insured or covered, which is important to all parties in the insurance business. Specifically, actuaries would have more information to help them better forecast losses. Both insurers and regulators also will be better informed about the markets; that is, good and bad years may be predicted by either an increasing or decreasing trend.
This excerpt is from an article published in the March 2004 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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Footnotes
1
C. Poteet, and T. Didonato, Journal of Workers’ Compensation,
2001, pp. 72–85.
2 Hugh Conway, and Jens Svenson, "Occupational injuries and illnesses rates, 1992–96; why they fell," Monthly Labor Review, November 1998, pp. 36–58.
3 R. E. Hartwig, W. J. Kahley, W. J. Restrepo, and T. E. Retterath, "Workers Compensation and Economic Cycles: A Longitudinal Approach," Paper presented at the November 1997 meeting of the Casualty Acturarial Society, available on the Internet at: www.casact.org/pubs/proceed/proceed97/ (visited Mar. 8, 2004).
4 Note that injuries and claims are used here interchangeably.
5 Hartwig and others "Workers Compensation and Economic Cycles," 1997.
6 California Indemnity Claim Frequency Analysis (California Workers’ Compensation Institute, WCIRB, 2000).
Injuries, Illnesses, and Fatalities
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