State of the Line Report

State of the Line Report

Donna Glenn, FCAS, MAAA, Chief Actuary
Donna Glenn

The workers compensation system faces significant uncertainty in the years ahead because of the COVID-19 pandemic and resulting economic fallout. COVID-19 is a shock to the industry, impacting almost every aspect of workers compensation. Nevertheless, NCCI’s Chief Actuary Donna Glenn says she is confident the system will respond effectively.

Glenn shared insights on how the pandemic will affect the workers comp system in 2020 and beyond:

  • Workers compensation premium is expected to decline as unemployment rises with varying impacts by industry
  • Several factors may exert upward or downward pressure on frequency and severity
  • As rules continue to change and the potential for compensability expansion exists, these changes could put upward pressure on system costs

Glenn explained that the workers compensation system remains financially strong, as outlined in the State of the Line Report.

The current uncertainties surrounding COVID-19 present a particular challenge in determining the ultimate impact it may have on workers compensation system costs. NCCI’s role includes providing timely and relevant analysis that supports its stakeholders in planning for what is ahead.

Key Takeaways

  • Workers compensation generated an underwriting gain in Calendar Year 2019 with a combined ratio of 85 for private carriers. This represented the lowest combined ratio for any major line of business within the property/casualty industry. The 2019 Accident Year result was 99—an important consideration as the industry evaluates how results will develop in the years ahead.
  • Total net written premium for workers comp declined to $47 billion from its 2018 level.
  • Lost-time claim frequency continued its decline, dropping 4% in 2019 on a preliminary basis. This long-term decline has been observed across almost every major data category reviewed, including, for example, nature of injury and part of body.