California -- Construction Claims More Expensive, Result in More Lost Time: [11/02/09]
Workers’ compensation claims from the California construction industry
are significantly higher than the statewide average for all claims, are
more likely to result in lost time, more frequently involve attorneys
and typically involve less experienced workers, the California Workers'
Compensation Institute (CWCI) said in a bulletin issued Friday.
CWCI said even with the economic downturn, construction represents one
of the largest sectors in the California economy. From 2001 to 2008,
construction workers accounted for about one out of every seven work
injuries in the state, second only to professional/clerical workers in
terms of claim volume.
Carpenters account for the largest number of construction industry
claims (17% of the reported injuries, 19% of the payments), though the
claims are widely dispersed across a number of job categories, with
plumbers, concrete/cement workers, electrical wiring workers, sheet
metal workers, wallboard installers, roofers, painters and excavation
workers each comprising at least 3% of the claims and benefit payments
in this sector.
For its analysis, the Institute examined 315,954 claims filed by
construction industry employees for accident years 2000 through 2008,
using its Industry Claims Information System. Those claims resulted in
total claim payments of more than $4.9 billion. The results were put
into an “Industry Score Card,” which is part of a series of analyses
that the research group is conducting on specific industries.
The demographic profile shows construction claimants average 34.4 years
of age at the time of injury, matching the average for all California
work injury claimants, though their average job tenure at the time of
injury is 2.4 years – 1.3 years less than the average for all claimants,
CWCI said. With construction being a male-dominated industry, women
comprise just 2.8% of construction-industry claims, compared to nearly
one-third of all claims statewide.
This sector also has a relatively high proportion of claimants working
for employers who paid less than $500,000 in annual premium (77.6% vs.
69.2% of all claimants) and not surprisingly, construction claimants are
heavily concentrated in and around urban areas. Los Angeles County
residents alone represent nearly 15% of the claims, while more than 60%
of the claimants live in and around the Los Angeles Basin, San Diego,
Sacramento and the San Francisco Bay Area.
The Institute found that as with average loss costs on all indemnity
claims statewide, average losses on construction sector indemnity claims
rose sharply from 2000 until the passage of Senate Bill 899 in 2004,
then briefly declined in the immediate aftermath of the reforms in 2004
and 2005, before resuming an upward trend in 2006. A comparison of
recent post-reform payments on indemnity claims taken 12 months after
the injury shows construction claim payments jumped
27.5% from an average of $10,316 ($5,409 medical, $4,907 indemnity) in
2005 to $13,157 ($7,189 medical, $5,968 indemnity) in 2007. Over the
same post-reform time frame, average first-year payments on indemnity
claims from all industries rose 23.8% from $13,468 ($6,519 medical,
$6,949 indemnity) to $16,667 ($7,972 medical, $8,695 indemnity).
A review of loss development by accident year shows first-year payments
on construction-industry indemnity claims tend to be lower than the
average for all indemnity claims, but accumulate more rapidly in the
second and third years after injury, surpassing the average for all
claims. For example, the 2005 accident year paid loss data (the most
current, fully developed data in the analysis) shows combined indemnity
and medical payments in the construction sector grew from an average
$10,316 one year post injury to $27,082 two years later (+163%), while
average paid losses on 2005 injury claims from all industries rose from
$13,468 to $23,594 (+75.2%).
Similarly, average paid losses on accident year 2006 construction claims
more than doubled (+105.9%) from $11,870 at 12 months post injury to
$24,442 at the 24-month benchmark (the latest loss data on those
claims); while at the same time average payments on 2006 injury claims
from all industries increased 38.3% from $14,781 to $20,441.
Among factors noted on the Score Card that may be associated with the
higher cost of construction claims as the claims mature:
• A mix of injuries that includes a higher rate of cumulative injuries
• A higher proportion of lost time cases (particularly temporary
• An indemnity claim closure rate at 36 months post injury that ranged
from about 65% to 73% between AY 2000 to AY 2005, suggesting that a
significant percentage of construction claims remain open for extended
• A slightly higher attorney involvement rate among permanent disability
claims in the construction sector.
The California Workers’ Compensation Institute ICIS Industry Score Card
for construction claims is the first in the Institute’s industry
analysis series and provides more detailed data and graphics on workers’
compensation claims experience in this sector.