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The current state of the workers' compensation industry: Turbulence

Every year, Stephen Klingel, president and CEO of the National Council on Compensation Insurance, Inc. (NCCI), chooses one word to define the current state of the workers' compensation industry. This year, that word is Turbulence. It's a word that does not emote confidence; rather, it conveys turmoil, unrest, and instability. Not comforting for employers.

Speaking at NCCI's 2015 Issues Symposium in May, Mr. Klingel noted:

Kathy Antonello, Chief Actuary for NCCI presented their State of the Line review and noted: "Results for the workers' compensation line improved again in 2014. Among the more positive signals were a combined ratio that fell below 100 for the first time since 2006, a second year of above average operating gains, and a continued decline in claim frequency."

"On the other hand, indemnity and medical severity increases have begun to outpace increases in the average weekly wage and medical consumer price index, low interest rates continue to make investing a challenge, and employment in some sectors of the economy - particularly construction and manufacturing - remains well below prerecession levels."

View the complete State of the Line.

Employer takeaway: It's easy to develop a myopic view of workers' compensation since it's so claims driven. But employers cannot afford to have their head in the sand when it comes to the "bigger picture." The issues are here now and how we handle them will determine the future of workers' compensation.