ORLANDO, Fla. – The workers’ compensation industry is healthy, with net premium income rising 11% in 2022 to $47.5 billion, a level similar to 2019 before the start of the COVID-19 pandemic, experts from the National Council on Compensation Insurance said Tuesday during their annual Insights Symposium.
Last year was also the sixth consecutive year that the overall total employment ratio was below 90, and the ninth consecutive year of profitability for corporate guarantees, said NCCI Chief Actuary Donna Glenn.
“Workers comp continues to be the most profitable property and casualty industry,” Glenn said during a State of the Line report presentation. “Incidence has returned to a 20-year average decline and covid-1
9 has declined significantly.”Despite what the NCCI hailed as good news, the industry saw a notable increase in claim severity, with medical claims up around 5% and tort claims up around 6% year over year, she said.
Meanwhile, the overall lost time claim rate has decreased slightly over the past two years, which can be attributed in part to improvements in workplace safety, automation and staff experience, she said.
There were increases in workplace injuries in specific sectors in 2021 and 2022, including package delivery and warehousing, two industries Glenn said saw many new hires.
Bends, slips and falls continue to be the most common workplace injuries, and there has been a recent increase in intermediate injuries as well as burns and abrasions. The largest reduction in the injury rate was linked to a reduced number of car accidents.
Manufacturing added many new hires in 2021 and 2022, and the rate of claims may be linked to shorter tenure combined with inadequate training, Glenn said. Similar claim rates occurred in parcel delivery, which saw a “significant increase in workplace injuries”, she said.
Still, “the long-term decline (in total injuries) appears to be continuing despite some increases in specific areas,” Glenn said.
The industry continues to monitor changes in medical costs, and medical lost time severity estimates for 2022 are 5% higher than 2021, Glenn said.
In terms of premium collected, Glenn said economic factors such as wages play a large role in net written premium growth and sectors such as transportation, warehouse and utilities continue to see greater than average growth.
“Despite many moving parts, wage growth in recent years has brought the workers’ compensation premium back to where it was in 2019,” Glenn said. “Employment is back to pre-pandemic levels, and wages are driving overall wage gains.”
The combined workers compensation rate was 84 in 2022, compared to 87.2 in 2021, and Glenn said comp continues to be in a strong financial position, with nearly a decade straight of underwriting profitability.
As for COVID-19, Glenn said workers continue to contract the virus on the job, “but the numbers have dropped significantly.” The Covid-19 claims represented 1% of total losses in the years 2020 to 2022, she said.
During a question-and-answer period, Dan Benzshawel, NCCI’s executive director and actuary, said worker wages continue to exceed average compensation costs and that frequency remains the main cost driver in the worker system.
Carolyn Wise, NCCI director and associate actuary, said she expects a continued decline in injury rates, linking the projected decline to workplace automation and the “general movement toward safer jobs.”
Wise said 2022 saw above average increases in medical severity but that medical fee schedules for physician services and facilities in some states continue to serve as good “cost containment mechanisms.”
“While prices do matter, so does usage,” Wise said.
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