NCCI Metrics Show Strength of Workers' Compensation System
The National Council on Compensation Insurance (NCCI) recently released its 2023 metrics, revealing that the workers' compensation system continues to perform strongly. The data shows a 1% increase in workers' compensation premiums for 2023, marking another year of financial health and stability in the system.
Key Highlights from the NCCI Report
Consistent Profitability: For the 10th consecutive year, private carriers in the workers' compensation market have achieved underwriting profitability, with a Calendar Year 2023 combined ratio of 86. This marks the 7th consecutive year with a combined ratio below 90, underscoring the market's strong performance.
Financial Health: "The overall numbers for workers' compensation show a financially healthy system," said Donna Glenn, Chief Actuary at NCCI. She emphasized the importance of looking beyond headline numbers to understand the intricacies of the system and identify potential risks that could impact the future.
System Stability: NCCI President and CEO Bill Donnell highlighted the unique features of the workers' compensation system that have differentiated it from other commercial lines in terms of performance. However, he also pointed to emerging challenges, including changes in claim frequency and medical cost inflation, that the system will need to address moving forward.
Insights from the State of the Line Report
NCCI's State of the Line Report provides additional key insights into the workers' compensation system:
Accident Year 2023 Combined Ratio: The Accident Year 2023 combined ratio stands at 98%, with prior years continuing to experience downward reserve development.
Reserve Redundancy: The workers' compensation reserve redundancy grew to $18 billion, reflecting the system's strong financial foundation.
Decline in Lost-Time Claim Frequency: Lost-time claim frequency saw a significant decline of 8% over the past year, more than twice the size of the long-term average decline. This indicates a reduction in the number of claims requiring time off from work.
Moderate Severity Changes: Severity changes were moderate for 2023, with medical claim severity increasing by 2% and indemnity claim severity rising by 5%.
Looking Ahead: Challenges and Opportunities
While the workers' compensation system remains strong, NCCI's leadership is mindful of the challenges ahead. The impact of frequency changes and medical cost inflation will be key areas to watch in the coming years. As the industry navigates these challenges, NCCI remains committed to maintaining the health and stability of the workers' compensation system.
At Sousa Law, LLC, we stay informed on the latest developments in workers' compensation to better serve our clients. If you have questions about how these changes might affect your workers' compensation claim, don't hesitate to contact us for professional legal guidance.