WC outlook improving 'somewhat': NCCI: Metrics improve but the line is still unprofitable for many carriers

Risk & Insurance, July, 2004 by Nancy Grover

Workers' compensation continues to be a market in transition, The latest industry news reported by the National Council on Compensation Insurance nearly mirrors the previous year's report. Once again, the combined ratio and injury frequency were down, and the residual market was at least stable. However, interest rates remained low, reserving issues were still a concern, medical inflation stayed high and terrorism exposures created uncertainty.

"Conditions are improving--somewhat," said Stephen J. Klingel, NCCI's president and CEO. "Contradictory and eroding forces are at work," Klingel opened NCCl's Annual Issues Symposium in Orlando, Fla., in May The Florida-based organization helps set workers' comp rates in most U.S. jurisdictions. The conference included the State of the Line report, NCCI's annual overview of the workers' comp system.

Perhaps the best news from the report was the estimated 2003 calendar year combined ratio of 108 percent--down three percentage points from 2002 and the second year of improvement. The combined ratio--essentially premium dollars and expenses compared to medical and wage losses paid--indicates how much money insurers are paying out for each dollar taken in.

Despite the improvement, the latest figure indicates carriers are continuing to lose money on the workers' comp Insurance line. However, the figures were significantly better than those reported in the early 1990s and again in the early 2000s.