Boca Raton, FL – The National Council on Compensation Insurance (NCCI) recently held its Annual Issues Symposium (AIS Virtual). The event—themed “A New Decade In Sight”—featured NCCI’s chief actuary, Donna Glenn, FCAS, MAAA, who delivered the company’s highly anticipated State of the Line Report. NCCI’s State of the Line Report provided a detailed description of the 2019 workers compensation industry results, market trends, and the impact of the pandemic.
“The workers compensation system faces significant uncertainty because of the COVID-19 pandemic and resulting economic fallout,” Glenn said. “COVID-19 is a shock to the industry, impacting almost every aspect of workers compensation.” Nevertheless, NCCI’s chief actuary said she is confident the system will respond effectively.
In the presentation, Glenn said that total workers compensation premium is expected to decline going forward as unemployment rises, with varying impacts by industry. As rules continue to change with respect to compensability, these changes could put upward pressure on system costs.
As presented in this year’s State of the Line Report, the Calendar-Year 2019 workers compensation combined ratio was 85% for private carriers. This is the sixth consecutive year that the workers compensation line of business posted an underwriting gain.
“The workers compensation industry had another good year in 2019,” Glenn said. “Declining claim frequency for the year, a strong industry reserve position, and favorable metrics in the residual market characterize the health of this line of business. I believe the line is well positioned to weather the challenges ahead.”
On an accident-year basis, the industry-reported 2019 workers compensation combined ratio was 99%. NCCI expects the 2019 accident year’s combined ratio to develop quite favorably over time.
Other market indicators and trends highlighted in NCCI’s 2020 State of the Line Report included the following:
- Total net written premium volume for the workers compensation line declined between 2018 and 2019 to $47 billion.
- NCCI estimates that reserves held by private carriers as of year-end 2019 are $10 billion redundant.
- During 2019, on a preliminary basis, lost-time claim frequency across NCCI jurisdictions declined, on average, by 4% from the prior year.
- During 2019, on a preliminary basis across NCCI jurisdictions, average accident-year indemnity-claim severity increased by 4% relative to the prior year. Medical lost-time claim severity increased by 3%, on average.
- The workers compensation Residual Market Pool premium volume was just under $1 billion in 2019, representing a market share of about 7%.
The free report and presentation recording are available here: NCCI State of the Workers Compensation Line 2020