Heading into its centennial year, NCCI reveals the results of its annual survey of top insurance executives. NCCI’s summary of responses is intended to provide a general sense of the most frequently mentioned items in our survey and the underlying questions that these executives have regarding the future.
Our 100 respondents provided clear insight into the concerns that are front-of-mind for them as we head into 2023:
- Rate adequacy
- Medical inflation
- The economy
- Shifting workforce/workplace
Top Industry Concerns
Rate adequacy—Rate adequacy is always a concern. Although premium rates and loss costs have been declining for years in most states, the workers comp (WC) line has retained an historically low combined ratio. Carriers expressed uncertainty about what the next five years will look like, including whether this downward trend will change and whether a change will result in loss cost/rate level increases. Many factors are in play that affect a carrier’s ability to maintain underwriting profitability, such as medical cost concerns, labor market dynamics, emerging risks, reserving practices, and general inflation. Executives expressed concerns that when trends—which have driven rates down for many years—eventually turn, the industry may not be able to react quickly. A related consideration was also raised: will the collective unfamiliarity of what an environment with rate level increases looks like affect the industry’s ability to adequately address rate level needs?
Resources related to this subject on
ncci.com include:
Medical inflation—Carriers noted concerns about the rising cost of medical treatments, especially continuous advancement in medical technology and treatments. When carriers do not see an associated rise in premium rates it can be disconcerting, in the sense that rates and costs could get too far out of sync. Trends in WC medical costs reflect changes in the mix of injuries and the types of services used to treat them, as well as changes in the prices of those services. And while medical prices contribute to general inflation, they do not grow at the same rate.
Resources related to this subject on
ncci.com include:
The economy—Uncertainty surrounding things like the labor market, an economic slowdown or recession, interest rates, and investment returns, all point to a challenging economic landscape for carriers.
The possibility of a recession weighs on some respondents considering the impact that unemployment and stagnant job growth could have on industries they serve.
Resources related to this subject on
ncci.com include:
Shifting workforce/workplace—This topic can be characterized by two major trends that carriers are watching:
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Worker shortages and inexperienced workers. The labor market continues to be tight, forcing some employers to hire inexperienced workers with less focus on safety training and pushing seasoned workers to work additional hours. Carriers are concerned with how this could affect the frequency and severity of on-the-job injuries.
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Remote and hybrid workers. Changes in work patterns following the pandemic are creating work environments with which the industry has little experience. How much lower is injury frequency for employees who are working from home? What new WC risks are there when working from home? How might payroll and premiums be impacted, as well as classifications of workers? Carriers are waiting for new data to gain insight.
Resources related to this subject on
ncci.com include:
As NCCI marks its 100 years of service, we can use this survey to inform additional research and programs to support the health and stability of the WC system. We recognize these four areas as among the most critical to the industry and we remain committed to delivering insights and solutions to our stakeholders.
For more analysis of important WC issues, check out the
INSIGHTS portal.
This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.
