Workers' comp premiums up 11% in 2022, reaching pre-pandemic levels
The NCCI reported the sector had a combined ratio of 84 in 2022, marking the sixth consecutive year with a combined ratio below 90.
During 2022, workers’ comp premiums increased 11%, reaching $47.5 billion and nearing levels similar to those collected in 2019, according to the National Council on Compensation Insurance (NCCI).
“Despite the unsettled environment over the past few years, the reality is that workers’ compensation has had more tailwinds than headwinds influencing results, NCCI President and CEO Bill Donnell said during the organization’s Annual Insights Symposium. “Experience tells us that it won’t last forever, and we must be ready.”
This past year also marked the ninth consecutive calendar year of underwriting profitability. The NCCI reported the sector had a combined ratio of 84, marking the sixth year running with a combined ratio below 90.
Donna Glenn, the chief actuary at the NCCI, said that the premium growth helped make up ground that was lost during the pandemic. However, she noted that medical expenses and large losses could cause turbulence moving forward.
During 2022, NCCI saw a “notable” rise in severity, with medical claim severity increasing 5% and indemnity claim severity growing 6% year-on-year. Although claims severity was up in the past year, NCCI noted that long term the market should be able to manage the increases.
In a January 2023 note, Fitch Ratings said medical inflation was relatively stable during the period the workers’ comp market saw a strong performance. However, medical inflation increased more than 4% for the 12 months ending Nov. 22, 2022, compared with 1.7% during the same period in 2021.
Medical inflation does appear to be cooling rapidly since the start of 2023. Since peaking in September 2022, which saw a 6% month-on-month increase, medical inflation has declined each month, according to Bureau of Labor Statics data. In March 2023, the U.S. health care inflation rate fell to 1.49%.
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