The workers compensation insurance market showed some signs of recovery in 2012, according to the annual “State of the Line” report from NCCI.

Among the positives, the combined ratio for workers compensation improved for the first time since 2006, premium grew for the second consecutive year, and clam frequency declined significantly for the first time since 2009.

The workers compensation calendar combined ratio was 109 in 2012, a six-point decrease from 2011. While a 109 combined ratio is far from satisfactory, the decline is welcome, NCCI said.

The accident year combined ratio also experienced a six-point improvement, declining to 108 in 2012, following 114 in 2011.

Net written premium (including state funds) also increased by 9 percent to $39.63 billion in 2012, after an 8 percent increase in 2011 – a welcome shift following the cumulative 27 percent decline in premium from 2006-2010.

In other good news, lost-time claim frequency improved significantly in 2012 – down 5 percent on average in NCCI states. This is slightly larger than NCCI’s long-term annual estimate of a 2-4 percent decline per year.

NCCI president and CEO Steve Klingel noted that while the positives are beginning to outweigh the negatives, there remains great opportunity for improvement:

Our optimism is tempered by knowing that external forces such as the economy, healthcare reform, and new legislation may still negatively affect the market. But for now, we view the overall industry condition as encouraging.”

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I.I.I. facts and statistics on workers comp are available here.