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NCCI’s Chief Actuary Kathy Antonello, FCAS, FSA, MAAA, delivered the company’s highly anticipated State of the Line Report, which provided the audience with a detailed description of 2018 industry results, market indicators, and trends.

The workers compensation Calendar Year 2018 combined ratio for private carriers was 83%. This is the fifth consecutive year that the workers compensation line of business has posted an underwriting gain. Total market net written premium volume increased to $48.6 billion in 2018.

The Calendar Year 2018 workers compensation combined ratio of 83 is the lowest on record since the 1930s. The industry’s favorable combined ratio results over the last several years has been primarily driven by notable improvement in the underlying loss ratios. Underwriting discipline appears to have contributed to these results in what seems to be a perpetual low interest rate environment, with low investment returns.

The combined ratio is typically expressed as a percentage. A ratio below 100 percent indicates that the company is making an underwriting profit, while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums.

On an accident-year basis, the industry-reported 2018 workers compensation combined ratio was 97%. NCCI expects this accident year’s combined ratio to develop favorably over time.

Other market indicators and trends highlighted in NCCI’s 2019 State of the Line Report included:

— NCCI estimates that as of Year-End 2018, the overall reserve position for private carriers is a $5 billion redundancy. A redundant workers compensation reserve position has not been observed in at least 25 years.
— On a preliminary basis, average lost-time claim frequency across NCCI states declined by 1% in 2018.
— In NCCI states, the preliminary 2018 average indemnity accident year claim severity increased by 3% relative to the corresponding 2017 value. Medical lost-time claim severity increased by 1%.
— The workers compensation Residual Market Pool premium volume was approximately $1 billion during 2018, representing a residual market share of about 7%.