Workers comp insurers thriving despite industry changes
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ORLANDO, FLA. — Private workers compensation insurers' combined ratios improved amid system challenges and workplace transformations, according to the National Council on Compensation Insurance Inc.
The workers compensation system is changing, but “the industry is adapting quite well,” NCCI chief actuary Kathy Antonello said Thursday during NCCI's 2016 Annual Issues Symposium in Orlando.
According to the Boca Raton, Florida-based rating and research organization's State of the Line Report, the combined ratio for private workers comp insurers improved six percentage points to 94% in 2015, from 100% in 2014.
“It's one of the best underwriting results we've had in decades,” Ms. Antonello said.
In another Thursday session, NCCI's President and CEO Bill Donnell said “there is increased recognition that underwriting matters more in a low interest rate environment.”
“The workplace is transforming with new monitoring technology, expanded automation, and new ways of how employees work,” Mr. Donnell added. “The regulatory environment is transforming with new participants and new agendas. The frequency and severity of potential system challenges are transforming the level of uncertainty as we move forward in 2016.”
Meanwhile, the overall reserve position for private workers comp insurers improved, with NCCI estimating a $7 billion reserve deficiency in 2015, down from a $10 billion deficiency in 2014, Ms. Antonello said.
According to preliminary findings for 2015, the average indemnity cost per lost time claim “increased slightly” by 1% to $23,500 while the average medical cost per lost time claim decreased 1% to $28,500, Ms. Antonello said, noting that prescription drug costs per active claim continue to increase.
She added that workers comp premiums for private insurers and state funds increased 2.9% to $45.5 billion in 2015, driven largely by an increase in payroll.
“Overall the industry financials are solid — 2015 is a good story,” Mr. Donnell said.
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