Boca Raton, FL – In the latest issue of their Gauging the Economy newsletter, NCCI examines the current state of the economy and the implications for workers compensation insurance.
Among the findings:
- Employment Growth
Recent increases in employment growth suggest that the recovery is gaining some traction. Barring any slowdown due to rising oil prices and weaker economic growth in the rest of the world, higher job growth will likely put upward pressure on claim frequency and exposure.
- Wage Growth
One of the key factors in determining indemnity severity is the change in average weekly wages. The projected recovery in the labor market suggests that pressure on severity due to wage inflation will increase as benefits are also linked to wages.
- Medical Inflation
Medical price inflation is a major driver of changes in medical severity. Accelerating medical care inflation suggests increased pressure on medical cost per claim. At the same time, increased use of costly medical treatment options will add further upward pressure to severity.
- Interest Rates
The current low interest rate environment will keep downward pressure on investment income for the property/casualty (P/C) industry.
The full report can be found here (PDF): Gauging the Economy Newsletter – March 2012