There is no better place to seek insights into the health of the workers' comp industry than the NCCI's annual State of the Line report, which was recently released. But as with all data, it must be taken into appropriate context, because this year's figures can easily represent two stories.
What's easy to notice and applaud is the industry's improvement. Not only is the 2013 workers' comp combined ratio of 101 far from the 2001 peak of 122, it is also a seven-point improvement over the previous year. However, the improvement represented in this data must be considered carefully, as the second, more telling story highlights a systemic problem the industry has yet to reconcile.
A 101 ratio means the workers' comp industry is still facing a 1% loss. In real numbers, this means that in 2013 underwriters lost $370 million on an insurance line with $37 billion in revenue. Additionally, the workers' comp industry has only been profitable for underwriters for two years in the past two decades.
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