Workers’ Comp Results – Key Takeaways

July 26, 2021| By Bill Lentz | Workers' Compensation | English

Region: North America

The COVID-19 pandemic has not had the dire impact on Workers’ Compensation that many originally feared, according to the National Council on Compensation Insurance’s State of the Line report. Confirming continued profitability for the line in 2020 and with strong year-end results amid a reopening economy, there is renewed confidence in the resilience of the Workers’ Comp system.

With a 2020 Calendar Year combined ratio of 87% for private carriers, it was the seventh consecutive year that Workers’ Comp posted an underwriting gain and the fourth consecutive year of results under 90%. Remarkably, the last three years have been the lowest combined ratios for Workers’ Comp since the 1930s. In fact, Workers’ Comp continues to be the most profitable of all the P&C lines of business.

While the combined ratio for Workers’ Comp remains strong, 2020 net written premium decreased by 10% from 2019, largely due to the significant drop in payroll resulting from the pandemic. Job losses related to COVID-19 mostly impacted low-wage workers, with the Leisure and Hospitality sector being the hardest hit. The ability to work remotely helped to maintain stability in the professional services area. Overall job growth has improved from an employment gap of -16% in April 2020 to -5.4% in March 2021.

Highlights from the NCCI State of the Line Annual Survey

WC Premium – Countrywide private carrier direct written premium decreased by 8.7% between 2019 and 2020. Net written premium for private carriers in 2020 is $38B.

Indemnity Severity – The 2020 average indemnity claim severity is estimated at $25,400, a 3% increase over 2019.

Reserve Adequacy – The 2020 WC reserve position for private carriers has grown to a $14 billion redundancy, compared to a $10 billion redundancy in 2019.

Claim Frequency – Excluding COVID-19 related claims, WC lost-time frequency for AY 2020 is estimated to be 7% lower than 2019. A larger than average decline, likely due to shutdowns and remote working.

Medical Severity – It is estimated that the average medical cost per lost-time claim for 2020 will be between a -2% and +2% change from 2019.


At their Annual Issues Symposium (AIS), NCCI’s President and CEO Bill Donnell commented on how COVID-19 didn’t create the massive claims event that many anticipated. He commended industry stakeholders for quickly stepping up, shifting to remote work models, and embracing technology to continue delivering on their promise to injured workers and making workplaces safer.

However, the pandemic has created new uncertainties for 2021 and beyond. Challenges include the continuing impact of COVID-19 from new variants/surges and long-haulers; the potential for presumption law expansion to boost costs; and a possible increase in frequency due to workers in new jobs.

Mr. Donnell stressed that Workers’ Comp stakeholders need to continue to focus on responsiveness, resilience, and fresh thinking, in addition to a commitment to strong core functions and long-term planning. Speaking to clients throughout the year, we were pleased to learn that despite the altered working environment, training programs continued, new employees were onboarded, and systems and processes continued to be upgraded. Resilience!

Meanwhile, Gen Re is in its 100th year of reinsurance relationships. We look forward to working together with our clients towards their continued success.


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