May 11, 2023 (BOCA RATON, FL)—Thought leaders from across the workers compensation system delivered insights and expert analysis at the National Council on Compensation Insurance (NCCI)
Annual Insights Symposium (AIS) 2023 May 8–10 in Orlando, FL. The
AIS Highlights Report is now available.
NCCI released its comprehensive
State of the Line Report, delivered the latest research on large claims, addressed physician cost trends beyond inflation, and shared perspective that every state has a unique story. The event also included insights on the industry’s labor market and a panel of medical experts offered their views on the future of medicine.
"NCCI serves the workers compensation system," said Bill Donnell, NCCI President and CEO. "We exist to serve carriers, regulators, and policymakers as you serve our most important system stakeholders: workers and their families."
Here is a recap of insights and quotes from NCCI’s
Annual Insights Symposium:
The Source You Trust
Bill Donnell, CPCU |
President and CEO, NCCI
Quotes
"You are part of a system that has made American workplaces safer and helped millions of people recover from workplace injuries."
"Despite the unsettled environment over the past few years, the reality is that workers compensation has had more tailwinds than headwinds influencing results. Experience tells us that it won’t last forever, and we must be ready."
"The one thing we know about the future is that we must continue to evolve and be responsive to our stakeholders."
State of the Line
Donna Glenn, FCAS, MAAA |
Chief Actuary, NCCI
Quotes
"The story is not simple, and there’s no one number or no one word that sums up the story of the workers compensation system today. In fact, it’s a story with many chapters."
"Overall, you see a healthy, strong workers compensation system."
"This marks the sixth consecutive year with a workers compensation combined ratio under 90 and the ninth consecutive year of underwriting gains."
"Workers compensation premium is up by 11%, which has essentially made up the ground that was lost during the pandemic."
"Each of you is part of the diverse engine of the insurance industry and our workers compensation system—which supports employers, their employees, and most importantly, the injured worker."
"We’re keeping a pulse on medical expenses and large losses in our jurisdictions."
Key Insights:
- Workers compensation premium increased 11% in 2022, returning to approximately the same level as four years ago, 2019.
- The calendar year combined ratio for workers compensation is 84%, a sign of underwriting profitability for the system.
- Workers compensation’s accident year combined ratio is 97% with prior years continuing to experience downward reserve development.
- The workers compensation reserve redundancy grew to $17 billion.
- Lost-time claim frequency returned to its 20-year trend, declining 4% in the past year.
- NCCI reported a notable rise in severity for 2022 with medical claim severity increasing about 5% and indemnity claim severity rising about 6% year over year. The longer-term perspective indicates this is a manageable rise.
Economics Video (State of the Line Report)—Patrick Coate: "The labor market started to cool off last year, but we are still in a very tight labor market. Despite rapid employment recovery and historically low unemployment, businesses are continuing to look for more workers."
Ratemaking Video (State of the Line Report)—Dan Benzshawel: "There’s no one-size-fits-all approach to workers compensation ratemaking. Behind every state’s workers compensation system is a unique story."
Managing Through the Talent Gap
Gregory P. Jacobson |
Co-Chief Executive Officer, The Jacobson Group
Jeff Rieder, CPA, CPCU, CLU® |
Partner, AON and Head of Ward Group
Quotes
Gregory P. Jacobson: "Historic demand for insurance talent has waned slightly; however, focusing on being an employer of choice is still vital for attracting and retaining high-performing employees."
Jeff Rieder: "Insurance companies across all sectors are competing for many of the same positions, and the demand for experienced staff will make it difficult to meet hiring targets. This will add more pressure on companies to have competitive compensation programs, keeping increases in pay higher than what has been seen in the past 10 years."
Key Insights:
- Despite the financial challenges of inflation and concerns of a recession, most insurers (67%) plan to increase headcounts in 2023.
- Recruiting difficulty has eased since 2022 but remains difficult compared to pre-pandemic levels. Roles in technology, underwriting, and claims remain in high demand.
- To stay competitive in today’s environment, insurers must aim to accommodate employees’ shifting expectations and preferences, while rethinking traditional recruiting and retention strategies.
Workers Comp at the Crossroads: Recession, Inflation, and Economic Uncertainty
Robert P. Hartwig, PhD, CPCU | Clinical Associate Professor of Finance, Darla Moore School of Business, University of South Carolina
Quotes
"Despite the expectation for more economic turbulence ahead, the property/casualty insurance industry will remain strong, stable, sound, and secure—executing their vital role in the economy without interruption."
Key Insights:
- The US economy, and labor markets in particular, have remained far more resilient in the face of rising interest rates than anyone imagined.
- Recent bank failures will spark a tightening of credit, increasing the odds of a recession beginning in the second half of 2023.
- P/C insurers manage assets and liabilities very conservatively and are highly unlikely to experience disruptions to their operations similar to those recently experienced by banks.
Under the Microscope: Medical Trends in Comp
Leonard F. Herk, PhD |
Executive Director and Senior Economist, NCCI
Carolyn Wise, ACAS, MAAA |
Manager and Associate Actuary, NCCI
Quotes
Leornard F. Herk: "Most of the change in the utilization of physician services during the past decade comes from a decrease in major surgery that is more than offset by an increase in service intensity per claim. This increase is predominantly from more physical therapy."
Carolyn Wise: "By understanding how injury mix and treatment mix impact utilization, and quantifying this, the industry can better manage care and costs for injured workers."
Key Insights:
- NCCI introduces an analytic method to deconstruct changes in medical utilization over time into contributions from changes in injury mix and medical treatment.
- NCCI’s analysis shows that the mix of worker injuries has changed in the past 10 years. The shares of shoulder, leg, and foot claims have increased while the share of back and neck claims has decreased.
- During the past decade, increased utilization of physician services per claim is largely driven by increased utilization of physical therapy, more than offsetting a reduction in surgery rates.
- The overall utilization of physician services per claim increased 8% during the past decade, making up about half of the 17% increase in paid cost for physician services in workers compensation.
Large Claims Deconstructed
Raji H. Chadarevian |
Executive Director—Actuarial Research, NCCI
Anae Myers, ACAS, MAAA |
Associate Actuary, NCCI
Quotes
Anae Myers: "Claims of more than $1 million are less than 0.5% of lost-time claims but make up a significant portion of total losses in workers compensation, up to 15%."
Raji H. Chadarevian: "Hospital costs are the biggest driver of large claims. But we also must pay attention to home health care expenses, medical supplies, and changes in drug prescribing patterns to understand the medical cost trends for large claims."
Key Insights:
- New research from NCCI sorts large claims—those of more than $1 million—into two groups: fast-emerging claims and slow-emerging claims. Fast-emerging claims reach $1 million within two years and are typically the result of severe traumatic injuries. Slow-emerging large claims are often soft tissue, degenerative-type injuries that escalate over time due to multiple medical conditions.
- Since 2002, the relative frequency of claims exceeding $1 million has decreased at an annual rate of 3%.
- The relative frequency of burns, spinal cord injuries, and traumatic brain injuries with claims of more than $1 million has grown by nearly 7% per year since 2012. By contrast, large claims for degenerative disc disorders and pain have decreased by 11% per year.
- Claims from the construction sector make up nearly a third of fast-emerging large claims.
- The factors driving inflation in large claims can be vastly different from the trends affecting more typical workers compensation claims.
Session summaries and the complete workers compensation
State of the Line Report and the
State of the Line Guide are available at
ncci.com.
About NCCI
With 100 years of experience, NCCI serves as the nation’s most comprehensive source for workers compensation data, insights, and solutions. As The Source You Trust, NCCI’s mission is to foster a healthy workers compensation system through its role as a licensed rating, advisory, and statistical organization. NCCI’s thought leaders analyze workplace trends and deliver insights to empower informed decision making. Its employees are proud to embrace an environment of respect, integrity, responsibility, diversity, and inclusion.
