NEW YORK--While presenting a generally rosy forecast ofunderwriting profitability for the property-casualty industry, thepresident of the Insurance Information Institute said he hasgrowing concerns about the workers' compensation line.

Speaking at a meeting of the Casualty Actuaries of Greater NewYork here on Thursday, Robert P. Hartwig, president of NewYork-based I.I.I., suggested that if recent occupational diseasestudies have merit, the trends they reveal could impact insurerresults going forward.

"I am concerned about latent disease," Mr. Hartwig said,referring to cancers or lung disorders developing in workers manyyears after they complete their jobs.

"There's an emerging literature on degenerative neurologicaldiseases associated with occupation," he added, noting, forexample, that Parkinson's disease is highly correlated with peoplewho have certain occupations. He added that a soon-to-be-releasedstudy by the World Health Organization will show "that people whowork the graveyard shift are more likely to get cancer."

Mr. Hartwig discussed the emerging issues after describing thedramatic improvement in workers' comp calendar-year combined ratiosin recent years. Since 2001, when the National Council ofCompensation Insurance reported an unprofitable 122 combined ratio,insurer fortunes have reversed, with the ratio dropping to 90.5 in2006.

Noting the workers' comp improvement contributed to the23.4-point drop in combined ratio for all commercial lines--from115.8 in 2001 to 92.4 in 2006--Mr. Hartwig said an improvement ofthis magnitude is unprecedented in commercial lines over afive-year period. It has never happened in the history of theindustry going back over 100 years of statistics, he added.

A key factor contributing to the workers' comp decline, Mr.Hartwig observed, has been the steady decline in the frequency oflost-time claims (claims from worker's injuries that keep them awayfrom their jobs and result in wage-loss benefits being paid byworkers' comp insurers).

The number of lost time claims has dropped by more thanhalf--52.1 percent since 1991--with drops of 6.6 and 6.8 in 2005and 2006 respectively, Mr. Hartwig noted.

On the other hand, the cost of these claims has risen, he said,pointing out that indemnity costs for lost-time claims have doubledsince 1993.

Also of concern is the rising share of medical costs in theworkers' comp insurance system, he said, noting that the medicalpercentage rose from 45 percent in mid-1980s to nearly 60 percentin 2006.

"That means workers' comp has become first and foremost a healthcare delivery system, and that comes with a lot of problems," hecommented.