Florida – In the latest Gauging the Economy newsletter, NCCI examines the current state of the economy and the implications for workers compensation insurance.
Among the findings:
- Employment Growth: Continued weakness in the economy is projected to produce slow growth in private sector employment. Slower job growth indicates that there will be limited pressure on claim frequency and exposure.
- Wage Growth: Changes in average weekly wages (AWW) are a key factor in determining indemnity severity. The projected weakness in the labor market suggests that pressure on indemnity severity due to wage inflation should increase only slowly.
- Medical Inflation: According to Moody’s Analytics, general inflationary pressure is expected to ease in 2012 but medical inflation is expected to remain strong and will negatively influence medical severity. Medical price inflation will continue to outpace general inflation in the economy in the foreseeable future.
- Interest Rates: Downward pressure on investment income for the property/casualty (P/C) industry will likely continue primarily due to actions by the Federal Reserve to keep interest rates very low for an extended period.
The full report can be found here (PDF): Gauging the Economy Newsletter – December 2011