NCCI Publishes Update to 2022 State of the WC Line Report

Boca Raton,FL( WorkCompAcademy) - At its Annual Insights Symposium (AIS) in May 2022, NCCI presented the State of the Line Report - a comprehensive account of financial results for the workers compensation (WC) line of business. The results presented in that report reflected the most current data available at the time, including NCCI’s preliminary estimates for Calendar Year 2021.

In this new report, NCCI provided updated results for 2021, as well as preliminary information for 2022.

For Calendar Year 2021, NCCI previously estimated WC written premium volume net of reinsurance (NWP) to be $38.3 billion for private carriers. The most recently reported industry data for that year is $38.2 billion, which represents a 0.5% increase from 2020’s NWP volume of $38.0 billion.

For Calendar Year 2021, NCCI previously estimated a WC net combined ratio of 87% for private carriers. Updated industry data indicates a net combined ratio of 87.2%, which represents a 12.8% underwriting gain.

The 2021 combined ratio is the fourth lowest combined ratio in recent history and the eighth consecutive underwriting gain for the WC industry. The current period of consecutive underwriting gains is unprecedented in terms of both duration and magnitude.

The 2021 combined ratio is the fourth lowest combined ratio in recent history and the eighth consecutive underwriting gain for the WC industry. The current period of consecutive underwriting gains is unprecedented in terms of both duration and magnitude.

The WC pretax operating gain measures the overall financial performance of the WC line of business, reflecting both underwriting and investment income. The Calendar Year 2021 underwriting gain of 12.8%, combined with the investment gain of 10.9%, resulted in a WC operating gain of 23.7% for that year. This value is slightly lower than the preliminary estimate of 25% shared at AIS 2022 and marks the fifth consecutive operating gain exceeding 20% for the WC industry.

Changes in rates/loss costs impact premium growth and are one of several factors, such as changes in the economy, cost containment initiatives, and reforms that may impact overall system costs. All else being equal, NCCI expects premium to decrease in 2022 by 7.5%, on average, as a result of rate/loss cost filings made in jurisdictions for which NCCI provides ratemaking services. Improved experience driven by long-term declines in lost-time claim frequency has contributed to this decrease. The changes shown below reflect both voluntary and assigned risk market approvals.

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