NCCI Annual Issues Symposium 2022 – The First Day of Great Info

The NCCI Annual Issues Symposium 2022 kicked off with me missing some of the morning sessions due to a medical issue.   Cristine Pike, Communications Director – NCCI, was kind enough to keep me up to date on the presentations until I arrived at the conference.

I will add comments on notes that I took from the conference.  The morning sessions are taken directly from the information that was forwarded by Cristine with a few added comments by me (in italics).  I was able to attend all the rest of the sessions.

(c) NCCI

Bill Donnell—The Insights You Trust – President and CEO, NCCI

• The worker’s compensation system is remarkably strong and resilient. Stakeholders in the system can take pride in how the industry has responded during the past two years.  This goes along with Dr. Bob Hartwig’s presentation that workers comp markets were never in a true crisis mode. 
• The business environment is changing, and the pace of change is quickening, so the demand for insights has never been greater. NCCI is expanding its efforts to deliver timely and valuable insights to keep the system healthy.
• The worker’s compensation system is challenged to step up once again. That means using data more effectively and keeping the focus on serving injured workers and their families.

“Our industry must stay true to its noble responsibility: helping injured workers and their families. This is why we exist.”

“For years we’ve talked about all the many changes and shifting demands as being ‘on the horizon.’ Now the horizon is here and we must be ready for it all.”

 Donna Glenn—State of the Line  – Chief Actuary, NCCI

• The worker’s compensation line is strong and healthy.
• The system saw its eighth consecutive year of underwriting profitability with a calendar year combined ratio of 87, outperforming other property-casualty lines.  I was shocked at this number.  I expected workers comp to “take it on the teeth” – but that scenario never happened.
• Net written premiums rose about 1% in 2021
• Lost-time claim frequency data suggests the long-term decline continues, despite a rise in frequency in 2021. Since 2019, frequency has declined slightly.  Frequency has been declining for years
• There is no change expected in medical and indemnity claims severity in 2021.  This number bucks the trend of increasing severity that counterbalanced declining frequency. 
• There are potential challenges ahead as medical costs could experience inflationary pressure.   From what I have seen medical costs were already hyper-inflated.  
• Worker’s compensation reserves are robust. Reserves grew to $16 billion redundant as of year-end 2021.  I have seen this in my loss run reviews over the last 18 months.  Carriers and TPAs have been keeping a closer watch on the reserve levels on files.   Many new algorithms will flag low or excessive reserving as a claim progresses. 

“Strong employment and significant wage growth are fueling worker’s compensation payroll increases. We have a remarkably strong and healthy system right now.”

“COVID-19 has been painful for all of us, but it has not undermined the worker’s compensation system.”   I think assigning the pandemic to a catastrophe code was a great idea by NCCI.

“We have a remarkably strong and healthy workers’ compensation system right now. In some cases, 2020 was an anomaly; however, in most cases, it was consistent and ‘business as usual.’ The same was true with 2021.”

“In ratemaking, individual state dynamics have added complexity. Not only do they have different benefits and different medical fee schedules, they have experienced different economic impacts and different loss activity. So, added complexity reinforces that every state is different.”   One of the best comments on Day 1.  Each state having its own unique workers comp system makes the system somewhat complex.

Katie Williamson— Workers Compensation Catastrophes: Past, Present, and Future – Director, Data Science, NCCI

• NCCI now defines a catastrophe as any single event with $50 million or more of worker’s compensation losses.
• NCCI has concluded that the current catastrophe load in ratemaking is sufficient.
• While uncertainty always remains, the system has a much greater understanding of pandemics and other extreme risks compared to two years ago.

“NCCI has taken a fresh look at how catastrophes figure into ratemaking for workers compensation in the wake of the COVID-19 pandemic.”

Hurricane Andrew and 9/11 were two of the catastrophes mentioned.

Len Herk and Carolyn Wise—The Great Reshuffle

• Today’s labor market has more short-tenured workers, more remote workers, and a different industry mix of employment than before the COVID-19 pandemic.  This was one of the best observations of any of the first day’s presentations.
• Short-tenured workers have a higher frequency of job-related injuries than full-tenured workers, and the difference in injury rates varies greatly across industries.  Yes, the learning curve has always been a constant.
• Remote workers appear to have a lower frequency of job-related injuries than on-site workers, and this difference appears not to vary across industries.
• Changes in the industry mix of employment—especially employment shifts between lower and higher severity classes—can have complex effects on aggregate frequency.
•  Len Herk: “While there are more short-tenured workers on the job today than two years ago, there were a lot of short-tenured workers even before the COVID pandemic.”
• Carolyn Wise: “The Great Reshuffle may lead to short-term frequency anomalies. However, it is not likely to cause a turn in the long-term frequency trend.”

Roger Ferguson – Federal Reserve Vice Chairman

Inclusive Leadership

One of the great attributes for leaders to have is empathy.

Hopeful for the future when talking to 20 to 30-year-olds

Crisis Leadership

• Fortitude/Resilience
• Expertise
• Teamwork
• Clarity of Roles

Intergenerational teams are more successful.

Workers Comp made capitalism work.

Workers Comp is a financial tool – as I have said often workers comp is an investment, not a cost. 

The financial sector is less diverse than the general population.

The insurance sector lags behind in AI.  – I have been saying this since the 1990s. 

Thomas Edison found 500 ways to fail before finding success.

Two of his influencers were Andrew Bremmer and Alan Greenspan who appointed him to the Fed.

The odds of a recession are high due to examining:

• History
• War
• Uneven supply side
• Relatively mild recession
• Labor force – slight hike in unemployment
• 10-year Treasury Bond increasing to 3.5% (forecast)

COVID-19 forced underwriting discipline in P&C

Next-generation – a sense of optimism, sense of confidence to solve problems

The NCCI Annual Issues Symposium 2022 ended here for the day.  Whew!  This was a ton of info on which to analyze and write a cogent article.  For the videos of each session, go here. 

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.

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