Understanding the big picture in workers’ compensation costs

Workers’ comp rates appear to be going down, but costs are going up. (Photo: Shutterstock)

In workers’ compensation, the trends over the past few years have been pointing to declining rates in most states. At the National Council on Compensation Insurance’s (NCCI) 2019 Annual Issues Symposium (NCCI-AIS), NCCI indicated the 2018 industry private carrier calendar year combined ratio was a record low of 83%. I heard comments from many carriers attending the NCCI-AIS that they were surprised by this figure as it did not reflect what they were seeing on their book of business.

To fully understand the workers’ compensation marketplace, it’s important to understand what information is included in NCCI and the independent bureau analysis in addition to the different ways they look at data. It’s also important to understand the drivers that ultimately impact the costs of workers’ compensation.