Key Takeaways from the NCCI State Advisory Forum

NCCI recently held their State Advisory Forum here in Alaska on October 25, 2018 regarding the state of affairs in Workers’ Compensation. These forums share important information to provide a greater understanding of Workers’ Compensation issues, and we’ve summarized the key points and discussions from the forum below.    

  • Nationwide Workers’ Compensation combined ratios are the lowest in 20 years.
  • Nationwide time-loss claims frequency is dropping 3.7% annually. They believe that this is because of a strong economy, however, the severity of the claims filed is increasing. To put this in perspective, there are fewer claims, but they are more severe than they were twenty years ago and indemnity severity is growing faster than wages.
  • In Alaska, premiums are declining, and combined ratios are very  
  • Time-loss claim frequency is following the nationwide trend by continuing to decline but is still higher than other states.
  • 2017 combined accident ratios were 79%.
  • Private employment in Alaska is declining and wage growth is below the national average.
  • 2018 shows an increase in wage growth with 1.5% growth in Alaska; compared to 5% in the Nation. This number is static in Alaska because the larger employment sectors are lagging.
  • Alaska’s Unemployment is well above the national average at 7.3% compared to the national average of 4%.
  • There is a prediction of a pull out of the Alaskan recession by the end of 2018 or the beginning of 2019. They are indicating that the reason for the recession is the fact that in Alaska oil and gas industry jobs account for 27% of the economy, compared to only 4% nationally. However, manufacturing in Alaska is on the rise and has out-performed the National average.
  • Assigned risk pool accounts for 14-16% of Alaska’s market share, compared to the nationwide share of 6%. Small businesses make up the majority of the assigned risk pool, but the policies are small and the volume of claims is low.
  • Opioid addiction is nationally rampant in Workers’ Compensation. Opioids are 3 times more likely prescribed in the course of a Workers’ Compensation claim than in other injuries. Additionally, the average claim costs when an injured worker uses opioids is 4x that of claims without opioid use. However, there appears to be some headway as opioid prescriptions in Workers’ Compensation have decreased by 16% over the past year. This is believed to be due to the PDMP’s (prescription drug monitoring program), and federal legislation to stop Opioid Abuse is currently in front of the President.
  • Nationally the GIG economy is challenging the traditional definition of an employee. Several states are looking at rewriting employee definitions to include employees of companies such as Uber and Lyft.

Marie Marx, Director of the Alaska Workers’ Compensation Division added to the meeting with the following key points:

  • Medical costs in Alaska are down 3% from last year and she will continue to implement more changes to decrease medical costs in her role on the Medical Service Review Board.
  • She would also like to create a Bill that would shorten dispute resolution (automatic hearing dates), and revamp the Reemployment Benefit process to get more people retrained. She also wants to revisit both Death Benefit and PPI rates since according to her research, Death Benefits haven’t been touched since 1966 and the PPI rate hasn’t been increased since 2000.

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