NCCI Provides Monthly Workers Comp Medical Inflation Insights Report – Correction
Could NCCI help adjusters set long-term reserves? Check out their report on Workers Comp Medical Inflation – worth a look. The reports are all free, and NCCI does not charge for any of this information.
Another free medical cost reference comes from WCRI. Check out this previous article on WCRI’s report. WCRI’s report is updated annually.
I recently received an emailed question from an adjuster on a recommendation for the best place to find a second opinion when setting long-term medical reserves on a new file. The TPA (Third Party Administrator) had a reserving suggestion AI-type of reserving algorithm. The injured employee was considered permanently totally disabled. It seems the algorithm did not adequately cover lifetime medical treatment cost inflation.
I referred them to a great source for the inflation component. The main page for everything concerning Workers Comp medical inflation can be found here.
The up-to-date report numbers for July 2025 can be found here.
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From NCCI –
The new index was created by NCCI’s Economics Team and provides the same comprehensive view of medical care as the Personal Health Care (PHC) index, but has two advantages:
- It is produced timelier (monthly)
- It is more reflective of workers compensation medical costs.
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For long-term medical inflation, look at the part of the chart below. The last row is NCCI’s WCMMI. That would be the medical inflation – specific to workers comp. (nice)
The term was invented by NCCI’s Economist Stephen Cooper. Remember that this is year-over-year, so if you are looking for 30 years, you would need to consider the five-year as 15.5% (3.1 x 5); the numbers are year-over-year (measured each year).
An even quicker 30-year would be multiplying the 15.5% by six to reach 93% over 30 years. Please take this as risk management and adjusting advice. An experienced adjuster’s gut feeling remains the best way to set reserves.
Correction
From NCCI email to me – I used the overall medical inflation – NCCI recommended using the WCWMI
The author’s multiplicative calculation (3.1% × 30 years = 93%) ignores the effect of compounding. Assuming an average increase of 3.1% per year, over 30 years the total increase would be 150% = [ (1 + 3.1%) ^ 30 ] – 1.
Using the WCWMI average of 2.5%, you get a total increase of 110% over 30 years = [ (1 + 2.5%) ^ 30] – 1
