The National Council on Compensation Insurance (NCCI), a national insurance rating and data collection bureau, specializes in workers’ comp data. Annually, it collects statistics covering over four million workers compensation insurance claims and two million policies. It uses this information to provide, among other things, information on trends in workers’ compensation throughout various industries, which enables them to make insurance rate and loss cost recommendations.
A favorable outlook for workers’ compensation insurance rates
The results so far from this fiscal year’s rate filing cycle, which began in July 2015 and will continue through June 2016, indicate that there could be a good pattern for policyholders moving forward. Of the 32 filings from the NCCI, 23 have been for decreases, 8 have been for increases and one—Illinois—was amenable to a no filing.
The Federal Reserve’s policies are contributing to lower insurance rates
Although these numbers have not been fully validated, many in the field of workers’ compensation believe that if these numbers hold, results similar to the 2015-2016 filing cycle can be expected for 2016-2017. According to a recent NCCI report, “The economic recovery in the United States remains on track, and continues to progress much as it has for the past several years. In our view, the Fed’s decision to stand pat on the federal funds rate was motivated first by the absence of observed inflation in the US economy, and, second, by a desire not to commit prematurely to interest rate tightening while there remains the possibility of international economic contraction instigated by China and while important sectors of the US economy remain soft, particularly the residential housing market.”
Workplace accidents have been less frequent and less severe
At its last annual meeting in 2015, NCCI offered its opinion that conditions have improved in the workers comp environment with premiums growing nationally in the workers’ compensation systems. Insurance executive Donna Urben says: “This is approximately the third-plus year of consecutive loss cost decrease, for a majority of the states,” and the accompanying lower rates “are driven by frequency and severity trends.” Overall, losses have been moderate and frequency trends have been in decline for several years.
The economy is aiding workers’ comp insurance pricing
Because payroll is used as the exposure base, the economy has a significant effect on workers’ comp pricing. As the economy continues to improve, more people are employed, resulting in more premiums for workers compensation carriers. Add to that an abundant capacity among these carriers to write workers’ comp policies, and it becomes evident that there is a competitive atmosphere, which will give options to consumers, policyholders and insured.
Low inflation, fewer and less severe work accidents, and a relatively strong economy, with falling unemployment and modest wage inflation, all point to a competitive workers’ compensation environment in 2016.
Contact Us For All Your Workers Comp Insurance Needs
It’s a buyer’s market for businesses shopping for workers’ compensation coverage—at least for the foreseeable future. For a competitive quote, contact us online or call (800) 947-1270 or (610) 775-3848.
