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NCCI Says Workers Comp Combined Ratio 94% – Shocker


NCCI Says Workers Comp Combined Ratio 94%

When NCCI says Workers Comp Combined Ratio fell 6% in one year, that was a real shocker no one could have anticipated from last year.

What happened in the Workers Comp underwriting and risk arenas that would have made such a turnaround in just one year?

94 percent ncci says workers comp combined ratio graphic
(c) 123RF

According to the 2016 State of the Line Report at NCCI’s Annual Issues Symposium, the combined ratio statistic shrank from 100% to 94%.   (See slide 21 of the report).   The report is a rather large PDF file.   If you are in the Workers Comp world, the report is worth reviewing even if for a few minutes.

The combined ratio is a great measure of overall market health.  The combined ratio is one of the better indicators on how the Workers Comp market is functioning for carriers.  One can draw an analogy to a personal credit score as your main financial figure.

The formula for the Combined Ratio = (Loss + Loss Adjustment Expenses + Underwriting Expense + Dividends) / Earned Premium.

Picture Hand Presenting NCCI Says Workers Comp Combined Ratio Banking Funds

The formula in simpler terms is  outgoing funds/ incoming funds.

A carrier or complete marketplace can still be profitable even with a Combined Ratio over 100% if the investments earn enough of a return.   However, investments are not earning that much of  a return.

How did the Workers Comp industry become profitable so quickly?  NCCI pointed to automation and general technology.   In my opinion, the results were due to taking Workers Comp off the back burner after employers were paying so much attention to the effects of the Affordable Care Act.

NCCI has a treasure trove of free educational information which is just a few clicks away.   You may want to explore their website for such terms as NCCI says workers comp combined ratio or just combined ratio for more information.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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