Washington – Workers’ compensation medical expense costs are growing at a rate far exceeding the increases in group health costs, and this will be a critical issue for property/casualty insurers and actuaries, attendees at the Casualty Loss Reserve Seminar were told.

Peter Rauner, FCAS and president, RMS Solutions Inc., gave an overview of the significance of the workers’ compensation insurance market, explaining that workers’ compensation is the largest commercial line and the largest source of industry loss reserves among property/casualty insurers. He framed the issue by describing how medical expenses are a large, growing portion of workers’ compensation benefits. According to NCCI data, in 1986, medical expenses accounted for 45% of the total claim costs, with indemnity accounting for 55%. In 2006, medical expenses had grown to 59% of the total workers compensation claim costs. In addition, workers’ compensation medical severities are growing at a rate well above the medical CPI growth rate.

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