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Combined Ratio Difference Debate – Calendar vs. Accident Year


Combined Ratio Difference – Different Numbers Show Improvement

The Combined Ratios of the Rating Bureaus and the carrier-reported numbers have always been a subject of debate.

Over the years, I have attended many NCCI (National), and WCIRB (California) in-person and online rating bureau conferences to keep current on the changes that occur each year.  This website is full of articles on those conferences.  See this article on Combined Ratios.

Whenever I mention the NCCI Combined Ratio’s great and still improving numbers, my friends and clients at the insurance carriers and agencies always mention that there are two sets of numbers.   The carrier reported numbers have improved a little.  The rating bureau numbers seem to show significant improvement.

One of the important concepts pointed out in my last article was that both sets of numbers are improving regardless of the final tallies.   If you watch the video on the last article, one will see that the Combined Ratio difference debate ended up being the #1 question posed to NCCI.   I recommend watching the snippet video produced by NCCI.  It is worth the seven minutes.

Let us start with the definitions of each and see why such a difference exists between the numbers. I will include the chart from the last article as a reference. WCIRB’s Combined Ratio chart for the 4th quarter of 2022 is at the end of this article.  The WCIRB reported only one set of statistics, not two.

NCCI Combined Ratio Chart from video
(c) NCCI – Boca Raton FL – used with permission

Combined Ratio Formula

The combined ratio formula is CR = (Losses + Expenses) / Earned Premium.   

The Calendar Year CR is what NCCI measures and reports.  As one can see in the above chart, 2021 had a CR of 91%, and 86% in 2022.   The carrier reported CR numbers for 2021 were 100% and 97% for 2022.

Why do these numbers vary?

Calendar Year vs. Accident Year

One only has to think of the number 18 months.  Once a policy begins (inception) the carriers report the final numbers for that policy year 18  months later.  This time gives the employer’s set of claims an extra six months after the policy expires for claims development.  This delay in reporting the Total Incurred figures.

This delay is exactly why the numbers vary.  The Combined Ratio difference between the calendar year and the accident year still shows an improvement regardless of the set of numbers.


WCIRB Chart - Combined Ratio Difference
(c) WCIRB – Oakland, CA


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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