Four top concerns stand out in response to NCCI’s latest Carrier Executive Survey:
- The financial health of the system
- Medical inflation
- Economic uncertainty
- The changing workforce and workplace
These concerns have shown up consistently in carrier feedback for several years, underscoring their importance to the industry.
The survey, now in its 24th year, draws feedback from more than 100 carriers annually and helps guide NCCI’s data-driven research, Thought Leadership, and many other NCCI priorities.
The following insights share more of the carrier executives’ feedback specific to medical inflation and the financial health of the system, as these two topics have been the most frequent across the span of these interactions.
Financial Health of the System
Will there be a turn? This and other related questions are common from inquiring stakeholders.
What you need to know: All metrics point to a healthy and strong system, as evidenced by nearly a decade of combined ratios below 90%. Preliminary results for 2024, based on NAIC data through midyear, suggest another strong year with a combined ratio of 90% or below. Improvements in safety and automation have contributed to nearly 20 years of frequency decline in states where NCCI provides ratemaking services. We expect this trend to continue.
Workers compensation combined ratios have been low in recent years due to:
- Continued long-term decline in frequency
- Moderate severity
- Growing wages
These favorable results for carriers drive loss costs down. When wage growth outpaces frequency and severity changes, loss costs will continue to decrease.
Bottom line: NCCI analyzes nearly every available metric and is always looking for indicators that could reveal a turn. Right now, there is no such indication.
Additional Insights: Navigating the WC Cycle—Will There Be a Turn?,
Underwriting Cycles (video),
State of the Line Guide
Medical Inflation
Industry stakeholders consistently name medical inflation as a top concern, and this year, it is more prevalent than ever.
What you need to know: There are two main considerations when evaluating medical inflation and its impact on workers compensation.
- Fee schedules are a major factor in keeping workers compensation (WC) medical costs in control. These state-mandated cost containment mechanisms put limits on WC payments to healthcare providers and how much those payments can change from one year to the next.
- Medical inflation in WC is different than medical inflation in the broader economy. Consider the different types of injuries and treatment in WC—the differentiation matters. The categories of treatment are also weighted differently. It’s important to look behind the numbers, as NCCI has identified in the
Workers Compensation Weighted Medical Price Index.
Analyzing this independently can be overwhelming. That is why NCCI has developed a suite of resources to convey the most current information on how trends are changing, providing insights to help stakeholders prepare for the future.
Bottom line: Currently, medical inflation and its impact on workers compensation is moderate and in the range of 2.5–3.5%. Medical inflation behaves differently in WC compared to the broader economy.
Additional Insights: Medical Resources one-pager.
Conclusion
NCCI’s annual Carrier Executive Survey is part of our ongoing communication efforts that identify key issues facing workers compensation stakeholders. This year’s survey highlights familiar top concerns and other emerging issues like
legalization of medical marijuana,
how climate impacts workers, and the evolving
regulatory and
legal landscape.
While the financial health of the system and medical inflation were the most frequently mentioned topics, NCCI is committed to helping stakeholders navigate the broad range of industry complexities to help support a sustainable and resilient future for those served by the protections of workers compensation. Look forward to more insights from NCCI in the weeks and months ahead!
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.
