2023 NCCI AIS 2nd Morning – Statistical Kai piʻi (Part 1)
The 2023 NCCI AIS second morning provided so much great data on workers comp that I struggled to keep up with the presentations. Dr. Bob Hartwig had 75+ slides. Some of the folks at NCCI covered mega claims and the somewhat surprising trends in Workers comp medical treatment.
Kai piʻi is the Hawaiian phrase for “big wave.” I had to split the second morning into two articles due to the amount of good information provided at the 2023 NCCI AIS 2nd morning presentations.
2023 NCCI AIS – Dr. Robert Hartwig – Workers’ Compensation at Crossroads
I feverishly type so many notes when Dr. Robert Hartwig presents his usual cadre of 60+ slides. Cristine Pike, NCCI Communication Director said that he had 75 slides this year. How he covers that many slides in an hour is amazing.
If you wish to download the slides, click here. Dr. Hartwig’s slides are definitely worth a few minutes of your time – amazing info. They can also spice up your presentation quickly. I heavily recommend listening to the presentation. It is 50 minutes of learning so much your head will spin – totally worth it.
I have bolded the amazing info – the whole presentation was amazing, as always.
Some of my notes from his presentation were:
- A hard recession is still unlikely, we will likely not return to the bad old days of the 70s and 80s recessions
- Consumer Sentiment at 20-year Lows
- Small business optimism at 12-year lows
- Stagflation hot item in press in 2022, mentioned much less in 2021
Dr. Hartwig forecasted a possible shallow recession in the second part of 2023 – which could last until 2024. The chance of some type of recession is 61%.
Medical inflation as a cost driver was not as significant as projected in 2022. <This was a shocker to me, I expected the medical inflation rate to blow through the roof.>
The US economy was not in a recession in 2022. The unemployment rate is currently at its lowest level since the 1960s. The unemployment rate is at record lows even though the unemployment rate forecast for 2023 was 5.1%.
The misery index= unemployment rate+ inflation rate = 7.8. The misery index was 11.6 in 2022.
Oil prices played a role in the 1920s recession – similar to the role of oil prices in any upcoming recession.
75.9% of economists are predicting a chance of a hard-landing type of recession.
The Combined ratio is 105 in recession years. The ratio was 104.6 in non-recession years. The combined ratio is a general measure of profitability by workers comp insurance carriers. If the combined ratio is below 100, then the worker’s comp insurance industry is operating at a profitable level. Since 2016, the combined ratio has been below 100.
Workers comp insurance has been under a persistent hard market. <I had thought Workers Comp was under a soft market due to the Combined Ratio>
The recession has had no discernible effect on Workers Comp or overall Property and Casualty underwriting performed over the last 50 years
Dr. Hartwig heavily emphasized “Beware of the X-Date” – the date the Federal Government defaults on paying the interest on its debt. We now have a 31.2 Trillion national debt. X-Date as soon as June 1st, 2023. The last X-Date in 2011 (8/11)
The exacerbating factor – 3 of 4 largest bank failures in 2023. In 2010 – 2011 the US experienced over 500 bank failures.
A 45% decline was experienced in insurance company profits last year. Insurance companies are paying claims, not bailouts like the banking industry
The S&P was down 19.4% in 2022 and increased +7.4% in 2023. P&C yield on invested assets was @ a 60-year low in 2021
Women coming back to the labor force faster than men
Vulnerable to AI Advances
- Low-level sales
- Claims legal- see my old article on this subject.
- Underwriting
- Actuarial – A very interesting vulnerability
Bottom Line @ Dr. Hartwig’s Presentation
Dr. Hartwig’s overall quote of the State of the Line 2023 – “Despite the expectation for more economic turbulence ahead, the Property and Casualty insurance sector will remain strong, stable, sound, and secure – executing their vital role in the economy without interruption.”
