Economic Realities Suggest Pandemic Has Been 'Manageable Event' for WC: Part 3

18 May, 2022 Nancy Grover


Orlando, FL ( – The two-plus years of living with COVID-19 has brought about a number of anomalies, to say the least. In addition to the human toll of the coronavirus there have been economic extremes, heightened political tensions and global challenges, to name a few. The workers’ compensation system continues to plod through the changes and figure out where we go from here. But the resilience of the industry has clearly shown through. 

“When we look back at 2020 and 2021, these are some strange years; none of us want to relive them,” said Donna Glenn, chief actuary for NCCI. “But in so many ways, it looks like business as usual.” 

During her state of the Line presentation at NCCI’s Annual Insights Symposium here last week, Glenn related that the Calendar Year combined ratio for workers’ compensation in 2021 was 87, something she called “unprecedented,” and “quite remarkable.”  

She also noted that 2021 was the 5th consecutive year of “huge” reserve releases, saying “we think there is more favorable development to come.” Claim severity remains “quite moderate,” and claims frequency “appears to be continuing its downward trend.” While COVID-19 has been “painful,” it “has not undermined the system.” 

“We have a remarkable, strong, consistent and stable system,” Glenn said.  

However, now is not the time for the system to let down its guard, the speakers said. The very nature of the workforce and how we work is shifting, and the system must be ready. 

“Our environment is changing and the pace is quickening. We must respond and adapt,” said Bill Donnell, NCCI’s president and CEO. “Workers’ compensation is being challenged to step up once again.” 

A number of issues are one the radars of workers’ compensation experts. 

Changing Workforce/Workplace 

The pandemic has produced what’s been called “the Great Reshuffle,” as millions of workers have quit their jobs; some leaving for other opportunities in the same sector, others changing careers, and many opting to leave the workforce entirely.  

Women have left the workforce in greater numbers than men. While they are returning, it’s at a slower pace than men as many continue childcare responsibilities.  

The quick shift to telework for many workers at the start of the pandemic has given way to a variety of workplace models; some businesses have kept employees working remotely, others have brought their workers back to in-person settings; while many have gone to a hybrid model of some work-from-home days and others at the office. 

The percentage of employees working remotely is “dropping precipitously,” said Robert P. Hartwig, Clinical Associate Professor of Finance for the Darla Moore School of Business at University of South Carolina. Nevertheless, “all the data we have show that teleworking seems to be around to stay, but many organizations are trying to figure it out.”  


The year 2021 saw the rate of claim frequency rise 7 percent – the first increase in years. Excluding claims for COVID-19, the rate still would have risen, albeit by just 2 percent.  

“We expected this, with people returning to work,” Glenn said. “Frequency declined slightly over the two-year period, which suggests long term frequency is still declining.” 

But the shift of many workers into new positions – even if the nature of their jobs are the same – puts upward pressure on claim rates. The potential impact on claim frequency is a concern, though not necessarily a major one. 

“There is nothing to tell us it’s not going to decline further,” Glenn said. “We did have a blip in 2010, during the last recession. We did see it again in the 2021 data, but nothing suggests the decline won’t continue. There is safety and automation and technology that employers continue to use to mitigate accidents in the workplace.” 


Inflation is the number one issue on the minds of many Americans. The industry is not immune to inflationary pressure, although it’s unclear what the impact will be. 

“It’s like the elephant in the room,” Glenn said. “We’re watching it for the pain points of workers’ compensation.” 

Recent government reports show April’s inflation rate to be 8.3 percent, down slightly from the 8.5 percent in March. Many economists expect inflation will be about 7.5 percent through 2022.  

“The expectation is inflation recedes in 2023,” Hartwig said. “Some of this could be pushed back because of conflicts in Ukraine and the [COVID-19] shutdown in China.” 

The lockdown in China is “the biggest threat to inflation and recession,” said Leonard F. Herk, Executive Director and Senior Economist at NCCI. “It’s seriously roiling supply chains.”  

The war between Ukraine and Russia is also a major driver of economic threats, Herk said. While the U.S. is not a direct trading partner with either, the countries do export food and energy to Europe and the Middle East. 

“The threat of the Federal Reserve raising interest rates so much that it triggers a recession is substantially less,” Herk said. “This is not your grandfather’s inflation. I think the Fed gets this and understands inflation is not being driven by easy credit conditions … what I’d watch is international events.” 

The probability of a recession in the next 12 months is about 28 percent, based on the opinions of leading economists surveyed by the Wall Street Journal. But if there is a recession, it likely won’t be as dire as some in the past. 

“The COVID-19 recession lasted just two months, ending in April 2020,” Hartwig said. “Before that they lasted almost 11 years. Some good news is in the fact that recessions tend to last much shorter periods of time than they used to. Most of the last several recessions were examples of that – except the Great Recession.” 


The impacts of so-called Long Covid are just beginning to emerge and are another concern for the workers’ compensation system. Identifying them is “a little more challenging than we anticipated,” said Nadege Bernard-Ahrendts, practice leader and senior actuary at NCCI. “We’ve partnered with a medical doctor to comb through the data … we’re trying to evaluate the impact of Long-COVID. We need to solidify the definition and identify them.” 

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    About The Author

    • Nancy Grover

      Nancy Grover is a freelance writer having recently retired as the Director, Media Services for She comes to our company with more than 35 years as a broadcast journalist and communications consultant. Grover’s specialties include insurance, workers’ compensation, financial services, substance abuse, healthcare and disability. For 12 years she served as the Program Chair of the National Workers’ Compensation and Disability Conference® & Expo. A journalism/speech graduate of Ohio Wesleyan University, Grover also holds an MBA from Palm Beach Atlantic University.

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