While presenting a generally rosy forecast of underwritingprofitability for the property-casualty industry, the president ofthe Insurance Information Institute said he has growing concernsabout the workers' compensation line.

Speaking here at a meeting of the Casualty Actuaries of GreaterNew York, Robert P. Hartwig suggested that if recent occupationaldisease studies have merit, the trends they reveal could impactinsurer results going forward.

"I am concerned about latent disease," he said, referring tocancers or lung disorders developing in workers many years afterthey complete their jobs.

"There's an emerging literature on degenerative neurologicaldiseases associated with occupation," he added--noting, forexample, that Parkinson's disease is highly correlated with peoplewho have certain occupations. He added that a soon-to-be-releasedWorld Health Organization study will show "that people who work thegraveyard shift are more likely to get cancer."

Mr. Hartwig discussed the emerging issues after describing thedramatic improvement in workers' comp calendar-year combined ratiosin recent years. Since 2001, when the National Council onCompensation Insurance reported an unprofitable 122 combined ratio,insurer fortunes have reversed, with the ratio dropping to 90.5 in2006.

Noting the workers' comp improvement contributed to the23.4-point drop in combined ratio for all commercial lines--from115.8 in 2001 to 92.4 in 2006--Mr. Hartwig said an improvement ofthis magnitude is unprecedented.

A key factor contributing to the workers' comp decline, Mr.Hartwig observed, has been the steady drop in the frequency oflost-time claims (for injuries that keep workers away from theirjobs and result in wage-loss benefits being paid by workers' compinsurers). The number of such claims has dropped by more thanhalf--52.1 percent since 1991--with drops of 6.6 and 6.8 percent in2005 and 2006, respectively, Mr. Hartwig noted.

On the other hand, the cost of these claims has risen, he said,pointing out that indemnity costs for lost-time claims have doubledsince 1993.

Also of concern is the rising share of medical costs in theworkers' comp system, he said, noting that the medical expensepercentage rose from 45 percent in the mid-1980s to nearly 60percent in 2006.

"That means workers' comp has become first and foremost a healthcare delivery system, and that comes with a lot of problems," hecommented.