WC Loss Picture 'Grim,' Says NCCI

By Daniel Hays

NU Online News, May 9, 10:05 a.m. EST, Orlando,Fla.?A major workers' compensation insurance group leaderhere described the industry loss picture as "grim."

Chapin Clark, chief executive officer and president of NCCIHoldings Inc., parent company of the National Council onCompensation Insurance, announced that the combined ratio for theindustry had increased to 121 for the 2001 calendar year?athree-point gain over 2000.

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

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

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

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

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

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