Turbulence Ahead

The workers’ compensation industry fared well in 2014. Net written premium for workers’ compensation continued its upward trend, with 2014 marking the fourth consecutive year of premium increases.

According to the National Council on Compensation Insurance (NCCI), the preliminary estimate for 2014 net written premium is $38.5 billion. This represents growth of 4.6 percent over the 2013 premium level and a similar increase to the 4.5 percent growth observed in 2013.

NCCI’s preliminary estimate of the 2014 net combined ratio for workers’ compensation also suggests improvement.

NCCI’s combined ratio estimate of 98, if realized, would be the industry’s first underwriting gain since 2006.

That’s good news for the workers’ comp line but NCCI analysts warn the future may be more turbulent.

Today, the workers’ compensation system is being challenged by a number of external forces, including the courts, the press, and even the Occupational Safety and Health Administration (OSHA), wrote Stephen J. Klingel, president and CEO of NCCI, in the recently released NCCI “State of the Line Report.”

“We’ve seen a number of court cases involving workers’ compensation. In Florida and Oklahoma, recent cases have focused directly on challenges to the fundamental principle of the exclusive remedy compact, which has been the bedrock of workers’ compensation.”

And in other areas of the country states are facing calls for increases in benefit levels.

“While there is nothing inherently wrong with advocating for greater benefits, those decisions should not be made without a balancing consideration of increased costs and who will pay,” Klingel wrote. To address the benefits concern, Klingel says that some advocates are even calling for a new national commission on workers’ compensation — similar to the commission created in 1972.

NCCI analysts expect 2015 to bring more activity for workers’ compensation legislation across a broad range of topics. But that’s nothing the industry can’t handle, Klingel says.

“These recent challenges are nothing new for an industry that has existed for more than 100 years,” Klingel wrote. “When the system has needed to change in the past, we have made the necessary changes to ensure that workers’ compensation insurance remains both viable and available. And we will meet the new challenges in the same way.”

Topics Workers' Compensation