Looking for Solutions in Tough Workers Comp Market
In the first week of May, NCCI Holdings, which manages the nation’s largest database of workers compensation insurance information, released its report on the annual State of the Line for Worker Compensation. It describes the current market state as “conflicted”.
In a nutshell, NCCI President and CEO Steve Klingel had this to say: “NCCI has observed a number of countervailing indicators in current industry conditions. In some ways, we are seeing an improved condition from 2010. By other measures, however, the market remains in a worrisome state. In sum, we see a market that is conflicted as to its forward trajectory, and that makes for a challenging environment.”
During the last several years, the Workers Comp market has been hit by a downturned economy, has had combined ratios remaining at unsustainably high levels (115 in 2011, which is the same as in 2010), and investment returns that aren’t enough to generate operating returns near the cost of capital. But, on the positive side, growth in written premium indicates that the worse of the recession may be behind us. According to the NCCI, in terms of premium (including state funds), net written premium increased to $36.3 billion in 2011. This 7.4% increase in premium is the first increase since 2005, and a welcome shift following the cumulative 27% decline in premium from 2006–2010.
Moving forward, the state of Workers Comp will depend on trends and developments in claims frequency, an uncertain underwriting cycle (with many carriers having stricter guidelines and turning down business), and the unknown impact of healthcare and financial services reform on the market.
At Caitlin-Morgan, we work with our agency partners to offer Workers Comp solutions to their clients, even for hard-to-place risks. We can provide self-fund programs, captives, and other alternatives while the market grapples with where it’s heading.
Give us at a call at 877.226.1027 to discuss your clients’ specific needs.