ORLANDO, FLA.--Workers' compensation insurers last year had their best results in nearly a decade, the chief actuary of the nation's largest comp rating organization reported today.

Dennis Mealy's comments came in remarks released before he was due to appear here at the National Council on Compensation Insurance Annual Issues Symposium.

The industry's key profitability yardstick--the calendar-year combined ratio--was 102 for 2005, which is a five-point improvement from the prior year and the best result since 1997, according to the NCCI's annual "State of the Line" preliminary market analysis.

For the accident-year combined ratio, the number for both 2004 and 2005 was 90, which NCCI noted was "the best results in recent memory" and a 50-point improvement since the disastrous 140 level hit in 1999.

Mr. Mealy said all major financial performance measures in the line showed improvement, with the stubborn exception of calendar-year combined ratio. Workers' comp, he noted, "was the only major line of insurance that had an improved combined ratio in 2005."

Other positive signs noted by NCCI in its market analysis include a reduction in loss reserve deficiency, which the data organization found to have dropped to "a manageable $3 billion" after discounting of lifetime pension cases. In 2001, the deficiency was $21 billion.

Claim frequency appears to be continuing its decade of decline, with lost-time claims last year falling 4.5 percent, based on preliminary NCCI data.

New written premium for the market rose about 9 percent for private carriers last year--for a sixth-straight year of increase, NCCI found.

However, despite its optimistic short-term view, "NCCI's longer view remains guarded due to the long-term challenges facing the business," according to NCCI's president and chief executive officer, Steve Klingel.

Difficulties spotlighted by NCCI and Mr. Klingel include:

o Rising medical costs, which NCCI said now account for nearly 60 percent of total workers' comp expenses in NCCI-rated states.

o Passage of regulatory reforms.

o Reduction of an unacceptably large residual market in some states.

o New forms of medical care service delivery.

o Possible terrorist attacks. (NCCI noted that the federal backstop for insurers provided in the Terrorism Risk Insurance Extension Act is due to expire Dec. 31, 2007. The group warned that in seven months, policies will be written that will have some exposure after TRIA expires.)

Special Reports /

Another Good Year For Comp Insurers: NCCI

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