The workers’ compensation system in the United States is the best performing line of property-casualty insurance, according to a recent report issued by the National Council on Compensation Insurance (NCCI). The organization’s State of the Line Report, released in July, points to a robust WC industry that, despite its current strength, still faces long-term risks.

Among the highlights of the report’s data points are the following:

• By the end of 2021, AC reserves grew to $16 billion redundant
• Capped by a combined ratio of 87 for calendar year 2021, the WC line has seen eight consecutive years of underwriting profitability
• From 2020 to 2021, there was no change in the average severity of indemnity and medical lost time claims
• Despite a rise in lost-time claim frequency in 2021, the data suggests a continuation of long-term decline

A summary page from NCCI’s State of the Line Report, issued last month:

Much of the data analyzed in the NCCI Report comes from the National Association of Insurance Commissioners’ Annual Statement data, in addition to NCCI’s own reporting, and other external sources, including employment and wage information from the U.S. Bureau of Labor Statistics and the U.S. Bureau of Economic Analysis.

While the report paints a rosy picture of today’s WC system, NCCI President and CEO Bill Donnell has witnessed the ebb and flow of the industry over the past 30 years and says, “there are no guarantees about tomorrow.”

Donnell summarized the State of the Line report in a recent article in Risk & Insurance. Acknowledging the positive tone of the report, he balanced the optimism with a realistic look at concerns and risks ahead, including long-term COVID-19, wage inflation, medical inflation, and a recession.

Donnell breaks down each of these concerns in his article and concludes by stating, “The threats on the horizon for workers’ compensation are real. We are in the business of risk, and the nature of risk changes all of the time. The system is healthy today, but as we saw with COVID-19, the world can change dramatically in a matter of days and weeks. So all of us in the workers’ compensation industry need to remain vigilant.”

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