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Comp line largely unaffected by pandemic: NCCI


The dire predictions on the COVID-19 pandemic’s impact on the workers compensation industry have not come to pass, as 2020 was another profitable year for the line, according to the National Council on Compensation Insurance’s annual State of the Line report.

“We feared the pandemic could be devastating to the workers compensation system,” said Donna Glenn, chief actuary for Boca Raton, Florida-based NCCI at the rating agency’s Annual Issues Symposium 2021, which was held virtually on Tuesday. “We continue to have uncertainties in 2021, but we have fewer of them. Plus, we have renewed confidence about the system’s strength and resilience.”

Net written premium in the workers compensation line fell 10% for both state funds and private insurers in 2020 and direct written premium by private insurers declined 8.7% from 2019 — driven by a 7.3% decline in loss cost, the recession and COVID-19, Ms. Glenn said. However, the line’s calendar year combined ratio remained strong at 87%, though it has deteriorated from 85.4% in 2019, and the line reported $14 billion in reserves at the end of 2020, according to the report.

Claim frequency, excluding COVID-19 claims, fell 7% in 2020, though indemnity severity increased 3%.

“We can continue to see the strength of the line. It’s now four years in a row with a combined ratio under 90,” Ms. Glenn said. “Overall reserve position for private carriers was even strong last year” and NCCI states reported just $260 million in COVID-19 losses for the year, she said.

NCCI states reported 45,000 coronavirus claims, with 75% indemnity-only claims, said Nadege Bernard-Ahrendts, NCCI practice leader and senior actuary during the presentation.

“Over 60% of the claims are less than $1,500 … 95% of COVID-19 claims are under $10,000,” she said. “Claims above $1,000 account for 1% of COVID-19 claims, but over 60% of total COVID-19 losses. The majority of these claims were still open at year end.”

And health care workers and first responders made up 75% of those COVID-19 claims, with nursing home workers reporting the highest number of coronavirus comp claims, Ms. Bernard-Ahrendts said. 

“It surprises me that we have so few claims,” Ms. Glenn said during a question-and-answer session. “What’s remarkable is that those people who had workers working in 2020 generally took care of them. If I see low claim volume here, it’s basically telling us that the system and employers are just being thoughtful and keeping the safety of employees in mind.”

More insurance and workers compensation news on the coronavirus crisis here.






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