Cautionary Outlook on Workers Comp

Slowing job creation during the economic downturn led to a continuing decrease in workers compensation claims frequency in 2008, according to the annual “State of the Line† report from NCCI Holdings Inc. It reported that workers comp claims frequency declined by 4 percent in 2008, compared to a decline of 2.6 percent in 2007. NCCI’s research indicates that the recession puts additional downward pressure on frequency. Its analysis showed that the workers comp 2008 calendar year combined ratio was 101, unchanged from the final 2007 number. NCCI said low interest rates together with dismal equity market performance left the line with post-tax returns that barely meet the industry’s cost of capital. It went on to flag some challenges for the workers comp line. Among them, the rising pace of medical and indemnity costs, low investment returns, uncertainty in the underwriting cycle and uncertainty due to the changing political landscape. For these reasons, NCCI’s short-term view of the line has changed from optimistic to guarded while the long-term outlook for workers comp is cautionary. Check out I.I.I.  facts & stats  on workplace safety/workers comp.

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