The US workers compensation system is strong, resilient, and healthy and it’s currently the best-performing line of property-casualty insurance.
The data tells the story. Take a look at these data points from NCCI’s recent
State of the Line Report:
- Eight consecutive years of underwriting profitability, with a 2021 calendar year combined ratio of 87
- In 2021, the average severity of indemnity and medical lost-time claims was unchanged relative to 2020
- Lost-time claim frequency data suggests the long-term decline has continued despite a rise in frequency in 2021
- Workers compensation reserves grew to $16 billion redundant as of year-end 2021
However, skepticism remains.
The last few years have changed the workforce, with potential impacts to workplace injury frequency. The shift to remote work is expected to persist, putting downward pressure on frequency. This is being offset by an increase of short-tenured workers, which tends to increase frequency, especially in certain industries.
After we shared our
State of the Line results, one industry veteran asked me, “Why are you so positive?” Another wondered, “Do you really believe all of those numbers?”
As an optimist, it is tempting to swat away questions like that. But I’m also a realist who has seen the workers compensation industry ebb and flow for decades. The industry is in a strong position today, but there are no guarantees about tomorrow.
With that in mind, let’s look at some of the concerns and the risks ahead for workers compensation, including long-term COVID-19, wage inflation, medical inflation, and a recession.
Bill Donnell's op-ed is featured in Risk & Insurance magazine. Access the full article here.
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