NCCI has a unique role in gathering and analyzing data about the workers compensation system. At our recent Annual Insights Symposium 2024, we shared the latest key performance metrics, research and analysis, and looked ahead to key issues and questions we must address.

Remarkable Results

As NCCI Chief Actuary Donna Glenn said at our symposium, the workers compensation system is in an era of extraordinary strength. A key factor in this is the steady and consistent decline in claim frequency. For two decades, claim frequency has declined at an average annual rate of 4 percent with 2023 showing an 8 percent reduction, due in large part to a continuous commitment to workplace safety. I’d be remiss if I did not also mention the industry’s commitment to addressing the opioid crisis, which impacted system costs and worker outcomes for too long.

Other performance metrics reflecting the state of the industry:

• Workers compensation premium increased by 1 percent in 2023, the lowest among property/casualty lines.
• The combined ratio increased slightly to 86, the seventh straight year below 90.
• Reserves remain robust with an estimated redundancy of $18 billion at year-end 2023.
• Severity changes were moderate for 2023 with increases of 2 percent for medical claim severity and 5 percent for indemnity claim severity, in line with wage increases.

The workers compensation line is also benefiting from a growing economy and stabilizing labor market, according to NCCI Senior Economist Stephen Cooper. Labor market churn has slowed significantly. Employment in 2023 expanded 2.3 percent and wages also increased 3.9 percent, supporting premium growth.

However, stakeholders have told us they’re concerned about how medical inflation, the economy and the labor market will affect workers compensation in the years ahead. They also have lingering concerns about the steady decline in rates and loss costs, according to our recent survey. At the crux of these concerns is rate adequacy and the long-term health of the system.

Keeping a Watchful Eye

The workers compensation system is healthy, in part, because it is a mature system with a long history and familiar risks. NCCI has collected and analyzed workers compensation data for more than a century, and we’ve seen the industry deliver remarkable results for a prolonged period.

As I see it, to sustain the system’s health, we must continue to innovate and keep a watchful eye on key industry drivers, trends, insights and emerging issues. NCCI experts are breaking new ground in our analysis and actively monitoring the market for specific trends that may disrupt and even improve the system.

For example, we’ve launched a deep dive into frequency trends in the construction, manufacturing, transportation and retail industries. Our new research shows that construction claim frequency is dropping nearly twice as fast as the average across all industries. Conversely, the research also shows that frequency rose dramatically for couriers and messengers, which was caused by a wave of small severity claims.

We have also doubled down on our efforts to understand what is happening with medical inflation. It’s a factor that is top of mind for many industry stakeholders due to its ability to undermine years of careful planning and analysis.

Our latest research shows that increases in medical paid cost per claim remain modest, at a 2 percent annual growth rate. We have also expanded our analysis by creating a timely new Workers Comp Weighted Medical Price Index (WCWMI) and Medical Inflation Insights report, which delivers a quarterly look at medical inflation. This new resource provides stakeholders with insights into how overall medical prices for workers compensation are trending and when to dive deeper into the details.

Our research is enabled by our stakeholders—it is their significant commitment and investment to provide quality data that enables us to deliver tomorrow’s insights.