NCCI Pandemic Analysis Verifies Insurance Crisis That Never Occurred

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2021 State of The Line – NCCI Pandemic Analysis – Incredibly Fast Recovery 

The NCCI pandemic analysis was quite a change of pace from the dire 2020 predictions for the Worker’s Comp markets.  I decided to attend the 2021 NCCI Virtual State of The Line – both days.   

Picture of COVID-19 NCCI Pandemic Analysis
Public Domain – Felipe Reed

The presentations were polished and well-prepared – good job by NCCI. 

The time spent was well worth it.  I was surprised at the level and speed of the economic and insurance recovery.  Let us look at the numbers.  

Statistics From The NCCI Pandemic Analysis

NCCI graciously included the presentation guide on their website.   The appendices in the guide contained both a list of definitions and the formulas used in the presentations. 

 I mainly focused on the presentations by Donna Glenn, NCCI Chief Actuary, and Dr. Robert Hartwig from the University of South Carolina. Dr. Hartwig has long been one of my go-to researchers for how insurance relates to the economy and vice-versa. 

From the guide – 

The workers’ compensation Calendar Year 2020 combined ratio for private carriers was 87%. This is the seventh consecutive year that the workers’ compensation line of business has posted an underwriting gain.   

Does that mean that during the pandemic carriers made a 13% profit?  Not exactly.  It does show that the Workers’ Comp market has been healthy for almost a decade.   

Another interesting development from the guide – 

Once the state fund premium is added in, the net written premium total is $42B, representing a 10% decrease from 2019.  

The anticipated drop in premium turned out to be more of a large “blip” than a crisis.  I was expecting at least a 20+% drop or more. 

Nadege Bernard-Ahrendts, NCCI Practice Leader presented the data on COVID-19 claims.  The total nationwide claims to date were much lower than anticipated at 45,000.  As expected, the healthcare industry had the most claims.   The frontline heroes took the brunt of the pandemic claims. 

NCCI Pandemic Analysis – Dr. Robert Hartwig 

The PowerPoint or PDF of Dr. Hartwig’s NCCI presentation can be found on this webpage.   Search for The Economics of Work Comp and the COVID Effect (May 12th, 2021).    Dr. Hartwig covered 60 slides in 4-5 minutes.    The optimistic outlook was a shocker to me. 

The info I had written down from his presentation (yes, on notebook paper) – 

Insurance Impact – 

  • COVID-19 had a small impact on P&C Industry – (shocker!) 
  • The Combined Ratios were not affected
  • The economy recovered much faster than anticipated, but it is extremely fragile (gas crisis?)
  • Carriers’ investment income was much lower 
  • 20% of COVID-19 insurance losses were US-Based 
  • Europe has much more liberal Business Interruption interpretations
  • Employers did a great job protecting employees – likely one of the main rapid recovery determinants 

Economy Impact – 

  • $27.75 Trillion National Debt – Quarter 4 2021
  • 2021 inflation – 3.3%
  • Used car prices +10%

Pandemic Paradox – 

  • Payrolls reached an all-time high in 2020 – what??? 
  • Wage increases were a major driver 
  • Women with schoolchildren – 40% of schools closed – unemployment driver
  • Couch cash – $300 federal unemployment supplement – people were paid to stay home
  • The stimulus did help the economy 
  • Savings rate in 2020 – 27,6% – what???  

Federal Government Backing of Insurance Industry – 

  • Not recommended – would be massive government intervention
  • No private insurer could handle back all the carriers 
  • PRIP (Pandemic Risk Insurance Program) not needed
  • Insurance market vulnerabilities are manifest – wow! 

Please follow the above links to The 2021 NCCI pandemic analysis.  The was one of the better webinars that I have attended.  As a consultant, I could not attend all the presentations.  The client customer has priority.  

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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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