Workers’ Compensation Super Bowl

The National Council of Compensation Insurnce (“NCCI”) hosts their Annual Issues Symposium this afternoon on a shortened and virtual basis.  There is no other conference that influences what happens with workers’ compensation reserving and pricing then this one.

All major carriers and their respective mathematical prophets will be on the line to measure profitability and the components thereof for the last year and historic.  Even more importantly this year, the prediction of go-forward profitability and pricing guidance/trend.

Click to access II_AIS2020-Agenda.pdf

Mr. Donnell starts off at 1:00, State of the Line at 1:15 and Bob Hartwig does a COVID presentation 2-3.  Very much condensed than usual and for the first time that I know of… its free!

We will be summarizing our interpretations of these presentations later in the day but please check out if you have the time.  Hartwig, especially, is a tremendous speaker –

The links below to join…

Plan to join us for NCCI’s Annual Issues Symposium—AIS Virtual<https://www.ncci.com/Articles/Pages/AIS_LiveStream_UserCapture.aspx?aisinvitelinkclick=yes>, May 12, 2020, 1:00 p.m. ET.

AIS Virtual is the premier workers compensation event offering actionable intelligence around the industry’s most relevant issues.

These helpful tips will get you ready:

 

  • For optimal viewing, use Chrome or Firefox and log in early to test your system’s livestreaming capability.

 

  • Log in will be available 15 minutes prior to our start time, and you’ll be able to enjoy our AIS Virtual preshow content as we count down to our 1:00 p.m. ET kickoff.

 

Following the main program, view our interactive Meet the Experts session, and access additional insights via our AIS Virtual Highlights Report on ncci.com.

For more information, and the full AIS Virtual agenda<https://www.ncci.com/Articles/Documents/II_AIS2020-Agenda.pdf>, visit ncci.com<https://www.ncci.com/Articles/Pages/II_AIS2020-Registration.aspx>.

Greetings from the NCCI Annual Issues Symposium (AIS)

The National Council this morning gave its annual update on the state of the workers’ compensation line.  As always, Chief Actuary Kathy Antonello did an awesome job of updating the most senior workers’ comp professionals across the globe on all of the relevant economic performance indicators that help us to understand this line of insurance.

The full report can be found off the NCCI website…

https://www.ncci.com/Articles/Pages/II_NewsFromAIS.aspx

…as well as other conference highlights.  Some key points to me from the report:

  • The expected combined ratio for this year is the lowest in almost half a century at an 89.  This is 5 points lower then last year’s 94.  This indicates an operating margin of 11 points on average.
  • The investment income gain went from 10.4% to 12% this year, effectively providing an overall return to workers’ compensation insurers of 23%
  • The overall market volume dropped from $45.6b to $45b in premiums, mostly due to rate drops countrywide.
  • The top five class codes (hardest to place) in the residual market are:
    • Carpentry 5645
    • Roofing 5551
    • Local Trucking 7228
    • Painting 5474
    • Long Haul Trucking 7229

I’d expect a lot of capital support for the line due to these results.

Always a great event and wonderful to catch up with so many friends –

2016 Workers’ Compensation Combined Ratio is a 94 per NCCI

It has been a busy month of conventions… NAPEO Legal and Legislative, RIMS and last week the NCCI.  On the ground at the PACE conference in New Orleans, a look back at the NCCI AIS.

The National Council of Compensation Insurance (“NCCI”) Annual Issues Symposium is the preeminent conference for understanding all things workers’ compensation.  Industry experts in the carrier, reinsurance and brokerage communities converge in Orlando every year in May to better understand the meaningful trends in the workers’ compensation line of insurance. The most meaningful number of this year’s event was 94… the lowest combined ratio of any other year since 1990 with the exception of 2006 (93).  It should also be noted that this is a 6 point drop from the 100 of last year and represents one of few years <100.

Based on typical patterns, this is now where capital enters the market… which was illuminated when the NCCI literally sold out of tickets.

With NAPEO’s Legal and Legislative Conference two weeks ago, the NCCI conference last week and PACE in New Orleans this week… it has been a high school reunion of sort – seeing good friends, telling old stories and commiserating on how to make the PEO industry the optimal platform for American business.  Health insurance maybe in the news every day but workers’ compensation is the line of business that PEO’s must have.

The origination of the PEO Compass was to provide an executive summary of all things workers’ compensation and how they impact all things PEO.  The NCCI is a huge driver of this nationwide and sets rates and rules in 37 states.  The document attached is a must read for those like me that are workers’ compensation and data geeks.

https://www.ncci.com/Articles/Documents/II_AIS2017-SOL-Guide.pdf

For those that are not (or would prefer not going through 57 slides), the highlights below:

  • The total P/C industry’s 2016 combined ratio (101%) represents a three-point increase versus that for 2015.
  • Combined ratios increased in all lines of business except workers compensation (slide 4)
  • Premium for the NCCI-serviced Residual Market Pools has remained stable over the last four policy years, at approximately $1.1 billion. (slide 12)
  • Between 2015 and 2016, countrywide private carrier direct written premium grew +2.4% (slide 15)
  • The percentage change in payroll (+4.5%) is approximately equal to the percentage change in the average wage (+2.5%) plus the percentage change in employment (+1.9%).  Employment grew at an above-average rate for the Professional and Business Services; Education and Health Services; Construction; and Leisure and Hospitality sectors.  Employment in the Manufacturing sector was flat, while the All Other sector posted a decrease primarily due to declines in Natural Resources and Mining employment (slide 17)
  • NCCI workers’ compensation filings with effective dates in 2017 averaged –6.7%… California and New York are already seeking approval for rate decreases which are not even part of this data set (slide 18)
  • In 2013, more than 70% of respondents saw an increase in premium at renewal, but by the fourth quarter of 2016, 62% reported seeing a decrease in premium at renewal (slide 23)
  • The workers compensation 2016 calendar year combined ratio for private carriers was 94%. This is the second consecutive year that the industry has posted a six-point underwriting gain. Consecutive combined ratios at this level have not been seen in at least the last 30 years (slide 24)

What this means is that workers’ compensation has become a very sexy line of insurance risk-bearers.  With favorable improvements in operating and investment performance, the median expected rate of return is +20%.  Again, it is therefore no surprise that this years NCCI AIS conference was sold out months prior to the event.

For those that happen to be in New Orleans this week for the annual PACE conference, let’s meet up and strategize in person about the great opportunities ahead for the industry.

– Paul R. Hughes

c: 321.217.7477

e. phughes@libertateins.com