Workers' Comp
Early NCCI Data: 8.1% Decrease in Workers’ Comp 2020 NPW

• Timothy Darragh
• March 2021
• 

Preliminary data from the National Council for Compensation Insurance estimated net premiums written for private workers' compensation carriers in 2020 fell 8.1% from 2019 to $38.6 billion.

NCCI Actuarial Consultant Brittni Moore and Director Vicky Mayen said 2020 was “a year like no other.”

The shock of the COVID-19 pandemic drove widespread business closures, affecting an insurance field sensitive to employment and payroll, they said. The NCCI based its estimate on decreases in rates/loss costs approved by state insurance departments for 2020, it said.

The drop compares to 2019, when net premiums written reached $42 billion, it said.

A year earlier, total market net premiums written volume increased to $48.6 billion, the NCCI said.

Workers' comp business combined ratio rose one point, from 85 in 2019 to 86 in 2020, it said.

The full extent of the premium decline will not be known until well into 2021, it said, following the completion of audits.

A December Best's Market Segment Report Catastrophes and COVID-19 Changing Business Trends for P/C Insurers said the decline in direct premiums written was even higher, at 13%, at least through the third quarter of 2020.

Emerging risks for workers' comp include the lower premium base due to lower employment, AM Best said. An additional risk lies in state legislation regarding presumption clauses and their potential impact on claims and defense-containment costs.

Last summer, the National Association of Mutual Insurance Companies said presumptions that states have granted not just to first responders and health care workers, but to other workers deemed essential, could be costly.

The NCCI brief also said that compared with 2019, private employment in NCCI jurisdictions declined by 5.1% in the first three quarters of 2020. The NCCI estimates a decline of 3.7% to 5.1% in employment in the fourth quarter of 2020, compared with 2019.