Despite early “dire estimates” of how the COVID-19 pandemic might affect the workers compensation insurance sector, the system has proved to be resilient, according to Bill Donnell, president and CEO of the National Council on Compensation Insurance (NCCI).
Triple-I CEO Sean Kevelighan recently spoke with Donnell about a range of workers comp topics, starting with how the line has managed to buck the hard-market trend affecting much of the rest of the industry. Workers comp plays a critical role in the U.S. economy and is the second-largest line of commercial insurance, with $42 billion in premium annually. As part of its mission to foster a healthy workers compensation system, NCCI gathers data, analyzes industry trends, and provides objective insurance rate and loss cost recommendations.
While much of the rest of the property and casualty insurance sector has been marked by rising rates in recent years, Donnell said, “Workers compensation rates have been trending down, unlike others in the marketplace.”
Even with rates falling, he said, the line has seen “seven years of underwriting gains and favorable combined ratios.” Combined ratio is the most commonly cited measure of profitability for individual insurers and for the industry.
Donnell added that, in 2020, workers comp writers had $14 billion in reserves.
“It’s a resilient system,” he said.
Donnell also offered his perspective on how the nearly 100-year-old industry can stay relevant in the years ahead.
“It’s about modernizing data and analysis,” he said. “It’s about attracting the best talent, and never losing focus about why we exist, which is helping injured workers and their families. I can’t think of a more noble mission than that one.”