NCCI Workers Comp Statistic Combined Ratio Smoking
Losses + Expenses / Earned Premium
The current workers comp statistic – Combined Ratio came in at 85% this year. The Combined Ratio measures a market’s total efficiency. Investment income by carriers is not counted in the Combined Ratio.
According to NCCI,, this was the best Combined Ratio in 50 years. Does this mean that carriers are making a 15% profit off all written premium – not exactly, but the more the number decreases, the healthier the market becomes overall.
Many people in the workers comp world say the statistic means that carriers are writing policies at a 15% rate of profit. I usually do not dissuade that type of discussion.
One of the more interesting concepts is no one can point out the source of the Combined Ratio improving so much. Could it be the economy? Yes, possibly.
The best way to think of the inputs that caused such a positive effect originates from a combination of variables. As Work Comp is such as delayed-measuring system, the true source of the success may not be attributed to any group of factors for another five to ten years.
I marked a few more pages in the presentation. (You may want to download the PDF from the first link in this article.)
- Slide 20 – Changes in Medical Lost-Time – Claim Severity by Component. The utilization number has decreased to an almost no growth figure compared to 20 years ago.
- Slide 32 – All states are reducing Loss Costs except Virginia Hawaii and South Carolina
- Slide 33 – North Carolina reduced Loss Cost on 4/1/17 by –14.4% which was the largest reduction in the US.
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