Boca Raton, FL – Every year, NCCI analyzes the overall adequacy of loss plus loss adjustment expense (LAE) reserves held by private carriers in the workers compensation (WC) insurance industry.1,2
The results reflect a comparison of projected ultimate loss ratios from NCCI’s analysis (NCCI selections) with those reported by carriers.3,4 NCCI’s loss reserve analysis helps monitor the health of the WC industry.
After its actuarial review, NCCI analyzes changes in reserve-setting practices or other changes which may impact the WC industry.
Analyzing loss ratios and the industry’s overall reserve adequacy is key to understanding the underlying drivers of the WC industry’s results. The results of this year’s analysis are consistent with those observed in the recent past:
- Reserve levels remain strong
- NCCI-projected industry loss and LAE ratios continue to be below those reported by carriers
NCCI noted that while it is possible that pandemic-related conservatism may have somewhat impacted the carrier-reported 2020 loss ratios, the COVID-19 pandemic has not had a major direct or indirect impact on the WC industry loss reserve analysis to date. Even so, NCCI observed a decrease in net earned premium5 volume between Calendar Years 2019 and 2020—partially attributable to COVID-19-related payroll declines.
Read the full report: NCCI: Annual Workers Compensation Industry Loss Reserve Analysis