This Just In ...

The National Council on Compensation Insurance Inc. reports that the combined ratio for workers’ compensation insurance, which was 94% in 2016, will likely be the same or possibly lower for 2017. The workers’ comp market has posted combined ratios of less than 100% only three other times since 1990, according to NCCI.

The combined ratio is the sum of insurance company losses plus underwriting expenses divided by earned premiums:

Combined Ratio =

Losses + Underwriting Expenses
Earned Premiums

Improvements in safety due to workplace automation and jobsite training contributed to the drop in combined ratio. NCCI also cited state reforms and resulting cost decreases, such as recent California legislation that addressed workers’ comp fraud and pharmacy fraud.

This means workers’ comp rates should be flat or slightly lower in 2018. At the same time, the economy is doing well and payrolls are often higher, so net premiums may be higher than last year for many employers. Also, even though overall rates may be lower, premiums for certain employers may be higher because of poor experience, as reflected in the firm’s experience modification factor.

For a fresh perspective on your workers’ comp situation in this market, please give us a call.

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In this issue:

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Workers’ Compensation and the Teleworker

The Six Types of OSHA Violations and Their Penalties

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