ORLANDO, Florida — The workers compensation sector remains profitable and stable despite the effects of the COVID-19 pandemic, rising inflation, and workforce changes.

The National Council on Compensation Insurance revealed its “state of the line” report on workers comp at its Annual Insights Symposium in Orlando, Florida, on Tuesday.

“The workers compensation system is strong and resilient,” said Bill Donnell, NCCI president and CEO. Even though “our environment is changing, and the pace is quickening relative to our workforce and our workplace.”

The sector reported that private insurer plus state funds net written premium increased 1% to $43 billion in 2021. The combined ratio for private insurers was 87% in 2021, making it the eighth consecutive year that the workers comp line of business has posted an underwriting profit. Last year also marked the fifth consecutive year of a combined ratio under 90%. The workers comp reserves are “robust,” according to the report, which showed reserves grew to $16 billion redundant as of year-end 2021.

The industry has profited “despite challenges and headways,” Mr. Donnell told attendees at the Boca Raton, Florida-based ratings agency’s first in-person annual meeting in two years.

Each of those years the organization’s panel of experts – in presentations offered online due to the pandemic — stated uncertainties regarding the effect of COVID-19 on the industry.

Although the industry is tracking the pandemic’s effects continuously — more variants and costs related to long COVID are concerns — it appears the overall effects are waning, as COVID-19 claims decreased in 2021 as did the costs related to worker infections, according to Donna Glenn, NCCI’s chief actuary.

The decrease in COVID-19 claims could be the result of widespread vaccinations and the vaccine mandates put in place, and the continued use of personal protective equipment, as most compensable infections continue to be among health care workers and first responders, she said. 

Other highlights of NCCI’s annual report showed that lost-time claim frequency data continued to decline, with the pandemic years 2020 and 2021 being fall-and-rise anomalies as shutdowns and reopening skewed numbers. Ms. Glenn said she anticipates frequency overall to continue to trend downward. 

In addition, 2021 changes in indemnity and medical claim severity are expected to be flat, according to the report.

Another issue to watch is the changing workforce: workforce shortages and a migration of workers to more “fulfilling” work, Ms. Glenn said. 

“Workers are on the move,” she said, adding that higher wages – sought by workers and delivered by employers looking for help — will affect the indemnity component of workers comp claim activity.

NCCI’s report showed that payroll increased more than 10% in 2021 — about 3% from employment and 7% from wages.

“We see this movement everywhere … it has caused a great reshuffle. For us in workers compensation our antennas go up,” she said. “Studies have shown that short tenure, lack of training, lack of experience can impact workplace injuries and we have concern for this movement.”