NCCI’s President’s Address

The 2017 NCCI Annual Issues Symposium kicked off with NCCI President and CEO Bill Donnell giving his assessment of the workers’ compensation system and the challenges it faces going forward.

One of the goals of NCCI is to help preserve the balance in the system by providing analysis that can be used by all stakeholders in reviewing cost drivers, benefit adequacy, and by helping the system evolve as needed.

The “word” used by Bill to describe the state of the workers’ compensation system in 2017 is ADAPTING. The system needs to continue to adapt in order to stay relevant and continue to meet the needs of all stakeholders.

In 2017 workers’ compensation premiums nationwide continued to climb, driven by increased payroll under the stronger economy. Pre-tax operating gains by carriers were also up.

95% of workers are covered by workers’ compensation, a number that has continued to climb. Frequency of loss has been declining for decades and workplaces are safer than they have ever been. The efforts of the workers’ compensation industry are a big reason for this. Carrier loss control staffs work with employers to identify risk factors and find ways to mitigate these risks.

However, the system is imperfect. There is widespread variation between states on benefit levels and legislatures are debating these differences. There are also bad actors in the system and it is estimated that fraud costs between $1-5 billion each year.

The workforce has evolved dramatically since 1950. Agriculture jobs shifted to become manufacturing jobs. And those jobs have shifted to the service sector. Today around 40% of jobs are in the service sector. We continue to see a shift with the retail marketplace evolving. Cashiers are the #2 occupation according to the Bureau of Labor Statistics, however many retailers are eliminating those jobs and replacing them with self-service kiosks. What will happen with service jobs going forward as the new retail model is more streamlined and focused less on brick and mortar operations?

How do we continue to stay relevant in today’s workplace? We need to share our successes. The workers’ compensation industry does many great things but we do not talk about these things enough. It is important that we tell our story and focus on our successes as others tend to only focus on our failures.

We also need to be mindful of the balance in our system. The system needs balance for long-term success and without balance the grand bargain is at risk.

We also need to expand our thought leadership efforts. There is an opportunity to stand out with information based on research and statistics rather than just anecdotes.

Finally, the industry needs to continue to evolve to keep up with changes in the workforce. We need to be quicker and more agile in making change so that we can stay relevant.