"Unfortunately, this year the state of the workers' compensation market remains difficult, with preliminary 2001 results reflecting one of the worst years in the market's history," he said. "The 2001 numbers tell a grim story, with some of the bad news tied to the Sept. 11 attacks on America."

But the NCCI said less than two percentage points, or $500 million, of the Calendar year 2001 combined ratio on a net basis can be attributed to claims resulting from the Sept. 11 terrorist attacks.

A majority of losses, it was noted, were ceded to reinsurers and will not be reflected on a net-of-reinsurance basis.

Among the best news to be reported was the fact that frequency of lost time claims declined in 2001 by 4 percent. At the same time, average increase in medical claim costs has risen 7.5 percent during the past 6 years. In 2001, medical severity of claims increased 11 percent.

As claims such as stress and respiratory disease become more certain, NCCI said the final numbers will undoubtedly change.

The organization said the preliminary 2001 accident year figure for combined ratio is likely to improve to 127 percent?better than the 133 percent reported for 2000.