Tag Archives: NCCI

Top 5 challenges for workers comp

The annual Focus on 5 survey by the National Council of Compensation Insurance (NCCI)  yielded the following issues that are keeping workers comp executives up at night:

  1. Will insurers be able to react quickly enough to preserve rate adequacy if loss costs start to rise after a sustained period of decline?
  2. How does an aging and changing workforce affect industry drivers like claims frequency and severity, along with wage and employment levels?
  3. What does the future hold for medical care costs, given variables like emerging healthcare technology and treatments, issues related to opioids and marijuana in the workplace, and mega-claims associated with seriously ill or injured workers?
  4. Will the gig economy ever grow to the extent that it affects workers comp premium levels? And will insurers develop innovative products to serve that market?
  5. How will rapidly changing workplace technology affect American jobs and the workers comp industry? Can regulation and legislation keep pace?

“It is critically important that we stay on top of the issues affecting our industry,” said Bill Donnell, NCCI president and CEO. “With a better understanding of the concerns of these leaders we can focus on key topics and provide insights that enable more informed decision making across the workers compensation system.”

 

NCCI Conference Roundup

Insurance Information Institute (I.I.I.) chief actuary James Lynch is on the road.

Spring is heavy conference season. I type this from an Orlando hotel room on May 14, after day one of the Annual Issues Symposium put on by the National Council on Compensation Insurance (NCCI). Ahead are trips to Colorado, Philadelphia and Atlanta, as well as two meetings close to home, in New York.

The NCCI conference is perhaps best known for president and  chief executive officer  Steve Klingel’s summary of the workers compensation line in a single word or phrase. This year: Calm now . . . but turbulence ahead. With premium up 4.6 percent and the combined ratio (98) at its lowest since 2006, workers comp results have been good, but outside pressures could make the ride bumpy.

One pressure is low interest rates. Years can pass from the time an insurer collects premium and injury claims get paid, and insurers in the meantime invest that premium, with the proceeds helping pay for claims and bolstering profits.

Interest rates have been so low for so long that the industry can’t rely on interest rates to deliver results anymore.

Another is the sharing economy. As  Dr. Robert Hartwig, president of the I.I.I. and an economist, noted later that day, the smartphone has made it easy to summon people to do ad hoc jobs, with the best known being Uber’s ride-sharing battalion.

Those workers are independent contractors (though that has been challenged) and as such don’t get traditional benefits, including workers comp coverage. As the sharing economy grows, workers comp could shrink.

The third is a series of attacks on the basic principles of workers compensation. News reports suggest workers comp doesn’t compensate injuries equitably; lawsuits suggest the line has violated the Grand Bargain that gives up a big tort payoff in exchange for a steady flow of benefits; and a nascent movement would let employers opt out of the workers compensation system altogether.

But workers comp has survived a lot in the century since it took hold in the United States and seems well-equipped to handle the, well, turbulence.

“While I am confident that we will work our way through these challenges,” Klingel said, “it is important to be realistic about current conditions and to recognize that the current positive results may not last.”

The I.I.I. has more workers comp  facts and statistics available here.

NCCI: Workers Comp Outlook Encouraging

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.†

Check out Insurance Journal for more on this story.

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