May 17, 2024 (BOCA RATON, FL)—The industry’s most respected thought leaders delivered exclusive workers compensation insights and analysis at the National Council on Compensation Insurance (NCCI)
Annual Insights Symposium (AIS) 2024 May 13–15 in Orlando, Florida. The
AIS Highlights Report is now available.
“Our industry helps injured workers at some of their most vulnerable moments. We are a force for good, for recovery, and for hope,” said Bill Donnell, President & CEO, NCCI.
“The workers compensation system is in an era of extraordinary strength,” said Donna Glenn, Chief Actuary, NCCI. “The NCCI
State of the Line Report showcases the strong performance and financial condition of our industry.”
Here is a recap of insights and quotes from
AIS:
The Source You Trust
Bill Donnell, CPCU | President and CEO, NCCI
Quotes
- “NCCI is strong and prepared for the future. The workers compensation system has unique features that have differentiated us from other commercial lines in terms of overall performance during the past several years. However, there are key questions ahead related to issues such as frequency trends and medical cost inflation.”—Bill Donnell, President and CEO, NCCI
- “When this system is at its best, it is healthy, resilient, and caring.” —Bill Donnell, President and CEO, NCCI
State of the Line
Donna Glenn, FCAS, MAAA | Chief Actuary, NCCI
Quotes
- “We have seen a steady decline in claim frequency for two decades in workers compensation. The 8% decline in 2023 stands as evidence of the extensive efforts made over the years to ensure the safety of workers on the job.” —Donna Glenn, Chief Actuary, NCCI
- “The overall numbers for workers compensation show a financially healthy system. To maintain the health of the system, NCCI continues to look beyond the headline numbers to understand the intricacies of the system and identify risks that may impact our future. We are relentless in our commitment to being
The Source You Trust for workers compensation insights.” —Donna Glenn, Chief Actuary, NCCI
Key Insights:
- Workers compensation net written premium increased 1% in 2023.
- The Calendar Year 2023 combined ratio for workers compensation is 86%, a sign of underwriting profitability for the system.
- Workers compensation’s Accident Year 2023 combined ratio is 98% with prior years continuing to experience downward reserve development.
- The workers compensation reserve redundancy grew to $18 billion.
- Lost-time claim frequency declined by 8% in the past year, which is more than two times the size of the long-term average decline.
- Severity changes were considered moderate for 2023 with increases of 2% for medical claim severity and 5% for indemnity claim severity.
State of the Line Video: Underwriting Cycles
State of the Line Video: NCCI’s Workers Comp Weighted Medical Price Index
State of the Line Dialogue With NCCI’s Experts
Donna Glenn, FCAS, MAAA | Chief Actuary, NCCI
Nadege Bernard, FCAS | Practice Leader and Senior Actuary, NCCI
Quotes
“Loss costs have been declining as wages rise and claim frequency improves. NCCI plays a vital role in identifying and analyzing early trends in the data, so the system responds appropriately to shifts in claims, the workforce, or other economic factors.” —Nadege Bernard, Practice Leader and Senior Actuary, NCCI
Key Insights:
- The bureau level decreases we are observing are mainly due to the loss cost changes—the portion of the premium responsible for covering indemnity and medical costs in the system.
- Workers compensation premiums are based on an inflation-sensitive exposure base: payroll. When wages outpace costs, rate and loss cost level decreases are indicated.
- Frequency continues its long-term decline. The continued focus on worker safety and technological advancements are contributing to fewer workplace injuries over time. Overall premium growth also supports this continued decline.
- Since 2009, both medical and indemnity severity changes have been considered moderate, contributing to more pronounced decreases.
Embracing the Future: How AI Is Revolutionizing Insurance
Jeffery A. Williams
Director, Digital Insurance Leader, Microsoft
Quotes
“AI is transformational technology that will shape the future of insurance.” —Jeffery A. Williams, Director, Digital Insurance Leader, Microsoft
Medical Cost Trends—What's in the Mix?
Raji H. Chadarevian
Executive Director—Actuarial Research, NCCI
Jon Sinclair, FCAS, MAAA
Director and Actuary, NCCI
Quotes
- “Our research reveals that the moderate growth in inpatient cost per claim in workers compensation is a function of a decrease in utilization of 22% since 2012. This is fueled by a dramatic drop in admissions and a shift of surgeries to an outpatient setting. By contrast, inpatient prices have grown by more than 50%.” —Raji Chadarevian, Executive Director—Actuarial Research, NCCI
- “Since 2012, a 24% decline in pharmacy costs resulting from decreased opioid prescribing and a shift to generic use has resulted in savings in direct pharmacy expenditure as well as in workers compensation settlements.” —Jon Sinclair, Director and Actuary, NCCI
Key Insights:
- Net of high-cost stays, hospital inpatient paid cost per claim has been growing at a moderate rate of
1.6% per year since 2012.
- To understand inpatient trends, we have created a
WC inpatient utilization measure based on
- the medical condition,
- the type of stay, and
- the number and type of days in a stay.
- Drivers of
annual inpatient trends include:
- Fewer but longer stays per claim, resulting in a decrease of 2% in inpatient utilization,
- A shift of some major surgeries from inpatient to outpatient settings, and
- An increase of 4% in the price per stay.
- Pharmacy costs are down
2.5% per year, driven by changing prescribing patterns, affecting future medical estimates and ultimate claim costs.
The Future of Workplace Safety Technology
Moderated by:
Damian D. England, ARM
Executive Director—Affiliate Services, NCCI
Panelists Include:Haytham Elhawary, PhD Cofounder and Chief Strategy Officer, Kinetic
Aidan Madigan-Curtis, MBA Board Member, Voxel
Quotes
- “It is clear that safety technologies will be a vital part of future safety initiatives. They may even be a gamechanger for evaluating and improving workplaces and reducing injuries.” —Damian England, Executive Director—Affiliate Services, NCCI
Key Insights:
- Safety technology is expanding into more industries and evolving into a broader range of applications.
- Fostering a safety culture and organizational buy-in are keys to success.
- Safety technologies provide a wealth of metrics—it’s the ease of using the data and recommendations for action that enable long-term adoption.
State of the Economy and Impact on Workers Compensation
Stephen Cooper
Executive Director and Senior Economist, NCCI
Quotes
- “Key economic indicators continue to drive the workers compensation system, including the growth in employment and the growth in wages.” —Stephen Cooper, Senior Economist, NCCI
Key Insights:
- Early on, NCCI analysis showed that the economy was not in recession, although public sentiment told a different story. With inflation cooling and wage growth increasing, public sentiment is beginning to match the true state of the economy.
- Labor market churn has slowed significantly. As employee turnover settles near pre-pandemic levels, we see signs of the labor market normalizing rather than deteriorating.
- Economic inflation has been a rollercoaster over the past few years, however, medical inflation has been more stable in the aggregate.
- NCCI created a Workers Comp Weighted Medical Price Index and
Medical Inflation Insights both of which enable timely tracking of medical inflation and its subcomponents.
Challenges for Today's Worker—The Big Three Physical Space | Mental Health | Environmental Impact
Patrick Coate, PhD
Senior Economist, NCCI
Anae Myers, ACAS, MAAA
Assistant Actuary, NCCI
Quotes
- “Our new NCCI research shows worker injuries increase by as much as 10% on very hot days as well as on wet and freezing days compared to mild weather. High temperatures impact construction and other outdoor workers most, while cold and wet weather leads to a lot more slip and fall injuries.” —Patrick Coate, Senior Economist, NCCI
- “New research from NCCI shows that claims exceeding $500,000 are 12 times more likely to be diagnosed with an associated mental condition during the course of treatment underscoring the potential for the impact of mental health in large claims.”—Anae Myers, Assistant Actuary
Key Insights:
Weather:
- Days with extreme temperatures, both hot and cold, exhibit 2%–10% more injuries in NCCI states compared to “mild” days.
- The largest effects of hot days are seen in outdoor sectors, particularly construction.
- On cold days, a larger effect is seen for cold and wet (icy) days, which lead to conditions that result in demonstrably more slip and fall injuries.
Safety:
- Hazardous movements like lifting, pushing, or pulling account for the majority of strain injuries, prompting advances in safety technology for sectors like Manufacturing and Warehousing.
- Strains, slips, and falls are the most common causes of lost-time injuries in workers compensation, accounting for more than 60% of lost-time claims in any given sector.
- Given the prevalence of these incidents across sectors, there could be promising applications of safety technology across sectors that mitigate or prevent some of these injuries.
Mental health:
- On average, claims with a mental diagnosis are 6 times more expensive than those without such diagnoses. This is mainly driven by differences in the distribution of medical conditions.
- Injured workers with high-severity injuries are more likely to be diagnosed with mental disorders, in particular when experiencing chronic pain or a traumatic brain injury.
- Adjusting for mix of medical conditions and surgery, we find that claims with a mental diagnosis are 2.5 times more costly, indicating the higher unadjusted differential is primarily due to the mix of underlying medical conditions.
Industry Drill Down—The Next Level
Sandra Kipust, FCAS, MAAA
Senior Practice Leader and Actuary, NCCI
Amanda Glish, FCAS, MAAA
Director and Actuary, NCCI
Quotes
- “We are delivering a deeper level of insights on claim frequency by industry. Our most recent data shows Construction frequency is declining nearly twice as fast as the average across all industries, a remarkable reduction.” —Sandra Kipust, FCAS, Senior Practice Leader and Actuary, NCCI
- “Most industries show consistent and steady declines in claim frequency. However, claim frequency increased in the Transportation and Warehousing sector in recent years. The Couriers and Messengers subsector is driving this increase, caused mostly by smaller severity claims.” —Amanda Glish, FCAS, Director and Actuary, NCCI
Key Insights:
- Construction is the largest industry, based on share of premium in NCCI states. Increasing employee tenure and a focus on safety have Construction leading the way in decreasing frequency, declining at an annual rate twice as large as all industries.
- The Manufacturing industry is spread across many types of manufacturing. While recent employment shifts are observed across job types within Manufacturing, frequency results remain favorable, suggesting that frequency is resilient to within-sector employment mix changes in the Manufacturing industry.
- Trade/Transportation show frequency patterns that differ from all industries.
Peeling back the layers of what’s driving this we see that: - Recent upticks in Transportation frequency are fully driven by worsening frequency coming from Couriers and Messengers (local delivery drivers) correlated with unprecedented employment growth since 2019. The good news is these are typically lower severity claims.
- Retail Trade is the only industry where we are not seeing a consistent decline in frequency. This flatter trend is observed throughout retail, which could indicate a change in the type of risk/job activity (e.g., typical “cashier” duties may be replaced with other higher-risk activities like gathering items for curbside pickups).
Check out the
AIS Highlights Report for even more information.
About NCCI
With over 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 a culture of inclusion, diversity, and respect for one another.
