U.S. workers comp insurers continue to underwrite profitably: Triple-I
According to a report by the Insurance Information Institute (Triple-I), U.S. workers compensation insurers could underwrite profitably between 2019 and 2022 in spite of significant changes within the nation’s workforce due to the COVID-19 pandemic.
“The line’s underwriting profitability for private carriers represented by the combined ratio remains strong,” stated Triple-I Issues recent Brief, Workers Compensation: State of the Risk, citing data dating back nearly a decade.
The analysis how’s that since 2014, workers compensation insurers cumulatively saw a net combined ratio of below 100%, with the figure staying consistently below 90% since 2017.
The net combined ratio for 2022 was an impressive 87.4%, including state funds, in comparison to 84% for private carriers only. According to Triple-I, U.S. auto, home, and business insurers, across all insurance lines, had a net combined ratio last year of 102.4%.
Dale Porfilio, FCAS, MAAA, Chief insurance officer at Triple-I, commented, “Commercial lines achieved lower net combined ratios than personal lines in both 2021 and 2022, and we forecast that to continue through at least 2025. Workers comp had the lowest combined ratio among major product lines in 2021 and 2022, resulting from many years of deliberate efforts by insurance carriers and their policyholders to improve workplace safety.”
Workers compensation benefited from a strong economy in recent years, most notably due to the growth in payrolls, the Issues Brief states. According to the U.S. Department of Labor’s Bureau of Labor Statistics, private employment surpassed its pre-pandemic level in 2022 and employment growth remains faster than pre-pandemic norms.
Factors like improved workplace safety and more employers allowing remote work arrangements, have driven down the number of workers compensation insurance claims filed annually since 2021, Triple-I found. At the same time, states having medical fee schedules reduces medical inflation as both insurers and medical providers set fixed prices for the services and products needed by injured workers.
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