UC Davis says it examined U.S. Bureau of Labor Statistics data on incidence rates for injuries and illnesses, along with data from the National Academy of Social Insurance on workers' compensation costs to employers and benefits to workers and medical providers from 1973 through 2007. The information was compared with Dow Jones Industrial Average indices and Treasury bond interest rates.

UC Davis says its researchers found that while premiums increased from 1992-2007, claims decreased 1 to 2 percent each year. Claims for serious illnesses and injuries varied, but decreased overall. Furthermore, UC Davis says that for the entire 35-year timeframe of the study, rising premium rates were closely linked with the DJIA or Treasury bonds. “As either the Dow or interest rates on Treasury bonds fell, premiums rose, and vice versa,” UC Davis says.

Leigh contends that understanding workers' compensation trends is important so policymakers can establish regulations that protect workers and contain costs.

“Insurance commissioners and legislators who regulate premium increases should pay greater attention to trends in claims rather than to insurance companies' returns on investments in allowing premium increases,” he says. “More effort should also be directed toward policing contractors and smaller businesses to assure they aren't circumventing workers' compensation laws.”

However, Trey Gillespie, senior workers' compensation director for the Property Casualty Insurers Association of America (PCI), states that insurers' rates are based on loss-cost data, which is based on claims data and not investment income or losses.

He also points to medical inflation as a factor that impacts workers' comp rates. “The study seems to overlook and minimize the impact of medical inflation on rising workers' compensation loss costs,” he says. “Medical costs in the workers' compensation system grow faster than the consumer price index and the medical price index and have grown to 59-60 percent of the total workers' compensation benefit costs nationally.”

He notes that employers have worked with insurers to implement safety programs and prevent injuries, but lower claim frequency has been offset by an increase in the average medical cost per lost time, from $8,200 per claim in 1991 to $27,700 per claim in 2010.

Regarding the correlation to the stock market, Gillespie says, “Nationally, workers' compensation premiums are down 29.3 percent for the period running from 2005-2010. This includes a period of time in which investment income was down as a result of the poor financial markets.”

Gillespie also says insurance carriers have been operating at calendar-year loss ratios that have exceeded 100 every year since 2006.