Workers’ Compensation has been among the outliers in the Property/Casualty market, with sustained stable rates over the last several years, while Property, General Liability, Commercial Auto, and Umbrella insurance have experienced consistent rate increases. According to the National Council on Compensation Insurance (NCCI), in 2022, the Workers’ Compensation segment produced a combined ratio of 87, indicating ongoing profitability and marking the ninth consecutive year with a ratio below 100. However, despite favorable conditions continuing into 2023, there are signs that the Workers’ Compensation soft market cycle may turn.
Increase in Accident Frequency
Over the last two decades, Workers’ Compensation accident frequency rates have declined, according to data from the NCCI, resulting in rate reductions for many employers. This pattern could be changing. According to Bureau of Labor Statistics (BLS) data for November and December 2022, private industry employers had a 4.5% increase in occupational injuries and a 5.7% increase in fatal injuries. The total occupational injury rate remained largely stable from 2021, but the rate rose when work-related illnesses were included. Furthermore, the number of fatal work injuries increased in 2022 compared to 2021.
Medical and Wage Inflation
Medical and wage inflation costs account for most Workers’ Compensation payments, according to the National Library of Medicine. Medical prices in the Workers’ Compensation segment have surpassed the 10-year norm, raising persistent concerns about medical inflation and rising Workers’ Compensation costs. Furthermore, many businesses have increased wages to recruit staff, resulting in wage inflation, which may result in higher Workers’ Compensation rates.
Evolving Presumptions
For many years, the most popular type of Workers’ Compensation legislation has been presumption laws involving first responders, which have since expanded to cover cancer. These presumptions shift the burden of proof so that conditions are “presumed” to be work-related unless the employer can demonstrate otherwise. In recent years, according to Carrier Chronicles, post-traumatic stress disorder (PTSD) has emerged as a presumption, affecting dispatchers and other professions. The presumptions produce scenarios where various workers exposed to the same situation have different claim outcomes. For example, a police officer reacting to a workplace shooting may submit a PTSD claim, but employees who were there at the time of the shooting may not. As of January 1, 2024, Connecticut made all employee PTSD claims compensable. Washington similarly enacted a PTSD presumption law for nurses this year. We will see whether other states will extend presumptions now that a legislative template has been established.
Workplace Violence
Workplace violence remains a trend year after year. It is the primary cause of injury among health care and K-12 education personnel. In fact, health care workers are five times as likely to experience workplace violence as other workers, according to government data. Employers are increasingly concerned about workplace safety, particularly psychological safety, which can impact employee morale and retention.
Improved risk management tools, safety training, automation, digital solutions (wearable safety technology and telemedicine), wellness training, and better employer claims management protocols will help keep Workers’ Compensation costs in line.
About One80 Intermediaries/Manchester Specialty
Manchester Specialty, a division of One80 Intermediaries, is a national specialty underwriting and insurance program management firm, licensed to do business as a program administrator in all 50 states and D.C. Our agent/broker partners and their Allied Health clients look to us for our expertise, broad product capability, and commitment to the market and the quality and stability of our insurance programs for Home Care, Medical Staffing, Allied Health, and Human Services organizations. For more information, call us toll-free at 1-855-972-9399 or visit Allied Health Firms – One80 Intermediaries.