NCCI report: Workers' comp system 'stronger than ever'

The U.S. workers’ comp system saw net premiums decline 10% during 2020, while carriers recorded $260 million in COVID-19 claims and other key economic metrics are at or near historic highs, according to the National Council on Compensation Insurance (NCCI).

Regarding the drop in premiums written, which totaled $42 billion in 2020, the council reports job losses and shrinking payrolls were the major driving forces.

Noting the system is emerging from the pandemic “stronger than ever,” NCCI President and CEO Bill Donnell said in a release: “The pandemic was the moment to rise to the challenge, and the workers’ compensation system did so with integrity. Our workers’ compensation system is fulfilling its noble mission to help injured workers.”

Concerning workers impacted by COVID-19, the council found that employees in nursing homes, hospitals, clinics and first-responders accounted for 75% of claims. Further, the costliest 1% of COVID-19 claims account for 60% of pandemic-related losses, while most (95%) COVID-related claims had a cost of less than $10,000.

Excluding COVID-19, the total workers’ comp claim frequency fell 7% during the year, according to the council’s State of the Line report.

Describing the system as strong and resilient, NCCI Chief Actuary Donna Glenn said: “The pandemic has been devastating for families, healthcare workers, and the economy. The workers’ compensation system has been strong and resilient. While net written premium dropped significantly during the recession, other financial metrics remain favorable, at or near historic highs. We have seen fewer COVID-19 claims than originally anticipated.”

NCCI also reports that private insurers posted a profitable year, with a combined ratio of 87, while workers’ compensation insurance saw a combined ratio below 90 for the fourth consecutive year. The reserves position of private insurance is also strong, increasing to a redundancy of $14 billion at year’s end.