ORLANDO – The workers compensation system continues to perform very strongly, as private insurers produced their 10th consecutive year of underwriting profitability and the combined ratio sat below 90% for the seventh year in a row, the National Council on Compensation Insurance reported during its Annual Insights Symposium Tuesday.
“Workers compensation continues to have the strongest profitability of all the property/casualty lines,” NCCI Chief Actuary Donna Glenn said during the annual State of the Line report. “It’s pretty stunning results we have here.”
The 2023 calendar year combined ratio was 86% while the accident year combined ratio was 98%, and the workers compensation reserve redundancy grew to $18 billion in 2023, $1 billion more than in 2022, experts said.
Lost-time claim frequency declined by 8% in 2023 and claims severity saw a “moderate” increase of 2% for medical costs and 5% for indemnity benefits, Ms. Glenn said.
Indemnity benefits are tied directly to wages, and indemnity severity typically increases as payroll goes up, experts said.
NCCI researchers said technological advancements and improved data analytics have led to improved claims cost management and processing.
Claims frequency continues its long-term decline and the focus on improving workplace safety through technological advancements and job automation are helping to contribute to fewer workplace injuries, Ms. Glenn said.
The industry also saw a 6% increase in payroll growth in 2023, with wage growth seen in nearly all sectors, she said.
“All in all, this is indicative of a very strong labor market,” Ms. Glenn said.
Payroll growth was about 7% for NCCI states and 5% for non-NCCI states, she said.
“Loss costs have been declining as wages rise and claim frequency improves,” said Nadege Bernard, a practice leader and senior actuary with NCCI.
Medical lost-time claims severity was expected to be about 2% higher in 2023 than in the prior year, experts said.
“The workers compensation system has unique features that have differentiated us from other commercial lines in terms of overall performance during the past several years,” said NCCI President and CEO Bill Donnell.
The industry continues to keep an eye on issues such as claims frequency trends and medical inflation as it looks to the future, Mr. Donnell said.