“NCCI just released its Workers Compensation 2016 Issues Report: Fall Edition. It’s a robust 68-page edition, an important barometer of industry results and trends that we think should be on everyone’s reading list. In addition to updated State of the Line results for the workers compensation for 2014 and 2015 and preliminary estimates for Calendar Year 2016, this edition includes articles and reports on a number of key issues. It’s available in both PDF and virtual flipbook style. It’s also available via individual article, which gives an overview of the contents.
We haven’t fully digested the whole report, but we point you to a few highlights and excerpts that caught our eye.
Workers Compensation Financial Results Update (PDF)
Some key findings:
- “NCCI’s current estimate for 2016 net written premium is $41.2 billion, a new high-water mark for the workers compensation line. This represents a 3.8% growth over the 2015 premium level.”
- “The 2015 net combined ratio for workers compensation of 94% marked the fourth consecutive year of improvement. NCCI’s preliminary estimate is that the combined ratio will hold steady at 94% in 2016. This represents three consecutive years of underwriting gains for an industry that has posted combined ratios of less than 100% in only two other years since 1990. The estimate for 2016 is based on private carrier direct calendar year incurred losses, direct earned premium, and historical net-to-direct ratios.”
- “NCCI reported at its 2016 Annual Issues Symposium that workers compensation lost-time medical severity decreased by an estimated 1% in Accident Year (AY) 2015. This marks the first time in more than two decades that medical severity has declined.”
- “A 3% decline in paid costs per claim for physician services accounts for most of the medical severity decline in AY 2015—a 3% decline in utilization of physician services is a major driver.”
- “NCCI estimates that for every $100 paid for medical services provided to workers injured in 2014, $17 will be paid for prescription drugs. Furthermore, the prescription drugs portion of medical costs increases rapidly as claims age. For every $100 of medical services paid on claims older than 10 years, approximately $45 to $50 will be for prescription drugs.”
- “While more than 700 bills addressing workers compensation issues were introduced, only about 10% of these measures were enacted and none of the enacted laws made significant system changes. It is of note that legislatures in MT, ND, NV, and TX do not convene in even numbered years.”
- “Going into these elections, Republicans hold their strongest state presence ever, with a majority in roughly 70% of state legislative chambers and full legislative dominance (holding the majority in both chambers) in 30 states. In addition, a Republican occupies the governor’s mansion in 31 states, 23 of which have a Republican sweep—the party holds sway in both chambers of the legislature and the governor’s office. There are only seven states where Democrats hold that coveted trifecta.
Come November 8, however, those numbers are likely to change.”
- “The ACA has had no discernible impact in crowding out workers compensation claimants from access to primary care services through 2014, the first full year of expanded medical insurance coverage under the ACA.”
- “68% of primary care services provided during the first 90 days of a workers compensation claim occur during the claim’s first 10 days.”