Workers Comp Long Term Outlook – Good + Bad
The National Council on Compensation Insurance (NCCI) had an optimistic outlook on the Workers Compensation market. However, the NCCI had recently adjusted its long term outlook for workers’ comp to cautionary. This may be the warning of a hard market.
These concerns, according to NCCI, include:
· Rising medical costs remain a significant challenge and continue to rise faster than wages. California is the best example of spiraling medical costs. The NCCI does not track CA statistics.
· Higher indemnity claim costs. Researchers found that indemnity claim costs also continue to outpace wage increases The number of claims have decreased. The higher indemnity and medical costs have offset the decrease in the number of claims.
· Lower investment yields. I am of the opinion that the insurance markets follow the stock market. The recent downturn in the economy should have hardened the market. The bailouts in the financial markets may have delayed the hard market.
· Potential political changes. I think the political changes such as a Federal Insurance office has caused great uncertainties in the market. Workers Comp benefits could be even be affected by the nationalized health insurance program. With all of these uncertainties, the market could harden very quickly.
What Is the effect of a hard market in Workers Compensation? I will post on that next time.
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