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Research and Statistics -- DLI statistics appendix

Average indemnity and medical costs of insured claims

This figure uses claims and loss data from the Minnesota Workers' Compensation Insurers Association (MWCIA) 2003 Minnesota Ratemaking Report, Appendix 7. This data comes from insurance company reports about policy experience for the voluntary market and the Assigned Risk Plan, which show claims numbers and indemnity and medical losses by claim type, plus payroll for individual policies. The experience for each policy is updated through a series of five annual reports. The loss data in each report reflects losses paid to date plus claim-specific reserves not yet paid. With each succeeding report, the claims, loss and payroll data is updated.

The claims and loss data in the Ratemaking Report is shown as of each report for each policy year. Fifth-report data was available only through policy-year 1995. Data for policy-years 1996 through 1999 was developed to a fifth-report basis using the "selected" development factors in Appendix 7, which reflect average rates of development for recent policy-years. This figure presents average indemnity and medical costs per claim. Without adjustment for wage growth, any given average claim cost means different things in different years, because its magnitude is different relative to the cost of labor.

To standardize the cost of benefits over time, average benefit costs per claim are adjusted for wage growth. The number for each year is multiplied by the ratio of the 2001 statewide average weekly wage (SAWW) to the SAWW for that year, using the SAWW reflecting wages paid during the respective year. Thus, the numbers for all years reflect average benefits per claim expressed in 2001 wage-dollars.

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