Market Spotlight: Workers' Compensation

For the first time in more than a decade, workers' compensation claims frequency, outside of COVID-19 illness claims, increased in the United States in 2021. Even so, the sector continues to be a bright light in the property/casualty insurance market. The profitability numbers over the last decade, in fact, are "unprecedented" and "quite remarkable," according to NCCI's chief actuary, Donna Glenn. NCCI data released in May showed that for the past two decades, the comp industry has seen a decline in lost-time claim frequency almost every year. The average annual decline for the 38 states for which NCCI tracks has been 3.8%, based on information from private carriers and state funds. The combined ratio for private workers' comp carriers in the U.S. remained at 87% for calendar year 2021. That's the same ratio as in 2020 - only slightly higher than in 2019 - and continued a profitability trend that began in 2014. There are a few noteworthy trends to keep an eye on going forward, including continued payroll growth fueled by wage growth, higher employment, and inflation.