Workers’ Comp Outlook: Indicators, Issues and Industry Success

NCCI President and CEO, Steve Klingel, kicked off the 2015 NCCI Annual Issues Symposium with an opening session that focused on the top-line industry indicators and emerging issues that will capture the attention of workers’ compensation professionals in the months and years ahead.

Top-of-the-line numbers:

• Net written premium for 2014 $44.2 billion, a 6% increase from prior year and fourth consecutive year of premium growth.
• NCCI projects 2014 industry combined ratio at 98%. The last time the combined ratio was under 100% was 2006.
• Claim frequency once again declined in 2014.

Looking at the economy, increased employment has led to increased payroll and corresponding premiums. However there are concerns that we could see a frequency uptake as workers start in jobs they are unfamiliar with. Interest rates continue to be low which which is an ongoing challenge to the industry. 

The workforce is evolving and will continue to evolve.  We are going to see employee relationships with no defined workplace or work schedule. This will lead us to develop new definitions of injuries and complicate investigations into course and scope of employment. Determining whether a person is an employee or an independent contractor will be increasingly challenging.

The fundamental principle of workers compensation is the grand bargain where employers receive exclusive remedy protections in exchange for providing workers with a no fault benefit delivery process. In the last year we have seen media reports and court cases that question whether the grand bargain still exists. If we are not careful, the current perception of unfairness will grow. We need to be sensitive to this. 

Every year, Mr. Klingel chooses one word to define the current state of the workers’ compensation industry. This year, that word is TURBULANCE.

It is anticipated that there will be significant scrutiny of benefit levels in state systems in the future. If benefit rates are increased, there must be corresponding rate increases to maintain the financial strength of the industry. There is turbulence ahead for our industry. The system is under attack from all sides. There are continued challenges to exclusive remedy. Our workforce is rapidly evolving.