NU ONLINE NEWS SERVICE, December 7 – While presenting a generally rosy forecast of underwriting profitability for the property/casualty industry, Robert Hartwig, president of the New York-based Insurance Information Institute shared growing concerns about the workers compensation line.

Speaking at a meeting of the Casualty Actuaries of Greater New York recently, Hartwig suggested that if recent occupational disease studies have merit, the trends they reveal could impact insurer results going forward.

I am concerned about latent disease, Hartwig said, referring to cancers or lung disorders developing in workers many years after they complete their jobs.

Theres an emerging literature on degenerative neurological diseases associated with occupation, he added, noting, for example, that Parkinsons disease is highly correlated with people who have certain occupations.

In addition, he noted that a soon-to-be-released study by the World Health Organization will show that people who work the graveyard shift are more likely to get cancer.

Hartwig discussed the emerging issues after describing the dramatic improvement in workers compensation calendar-year combined ratios in recent years. Since 2001, when the National Council of Compensation Insurance reported an unprofitable 122 combined ratio, insurer fortunes have reversed, with the ratio dropping to 90.5 in 2006.

Noting that the workers compensation improvement contributed to a similar 32-point drop in combined ratio points for all commercial lines taken together " from 122 in 2001 to 90.5 in 2006 " Hartwig said that an improvement of this magnitude in commercial lines in a five-year period is unprecedented.

A key factor contributing to the workers compensation decline, Hartwig noted, has been the steady decline in the frequency of lost-time claims (claims from worker injuries that keep workers away from their jobs and result in wage-loss benefits being paid out by workers compensation insurers).

The number of lost time claims has dropped by more than half " 52.1 percent since 1991 " with drops of 6.6 and 6.8 in 2005 and 2006, Hartwig pointed out.

On the other hand, the cost of these claims has risen, he said, noting that indemnity costs for lost-time claims have doubled since 1993.

Also concerning is the rising share of medical costs in the workers compensation insurance system, he said, noting that the medical percentage rose from 45 percent in mid-1980s to nearly 60 percent in 2006.

That means workers comp has become first and foremost a health care delivery system and that comes with a lot of problems, he said.