Workers Compensation Experiences Continued Growth in Q1 2013
Dr. Robert Hartwig of the Insurance Information Institute (I.I.I.) in discussing the Workers’ Compensation market over the last couple of years addressed industry-wide efforts by insurers to lower their combined ratio in an effort to improve underwriting performance and restore profitability to this very important commercial line. These efforts, along with firmer pricing in Workers Compensation, according to Hartwig and others in our industry, began in 2011, gained momentum in 2012, and remain strong for 2013, helping to reverse the negative trend.
Fitch Ratings underscores this in a recent report, saying, “An improvement in pricing for workers’ comp insurers over two consecutive years comes after “a long period of declining premium rates.” MarketScout in May also showed a 6% increase in Workers’ Comp rates.
In addition to the notable improvement in underwriting performance and steady rate increases, a rebounding economy has also helped the Workers’ Comp market with a rise in exposure (payroll) growth. Dr. Hartwig, in a recent report on the state of the Property & Casualty industry, stated: “Improving labor market conditions in 2012 are also critical to top line growth in the P/C insurance industry. Job growth benefits the entire economy, of course, but the associated expansion of payrolls benefits workers’ compensation insurers in particular. The United States economy added 637,000 private sector jobs during the first quarter of 2013 (and 972,000 through May). Combined with modest increases in the hourly earnings of employees, payrolls expanded at an average annual pace of $188 billion during the quarter, which will contribute to billions of dollars in new premiums written being earned by workers compensation insurers in 2013. Indeed, workers’ compensation, hit hard during the recession by a soft market and a precipitous drop in payrolls, has within the span of just a few years transformed itself from the fastest contracting major property/casualty line to the fastest growing, with direct premium growth in 2013 up by approximately 10 percent.”
What’s more, it’s expected that strong growth in the Workers’ Compensation line combined with a recovery in the residential construction sector and stronger car sales will serve to help us see a continued moderate growth in the industry for the remainder of 2013.
Caitlin-Morgan has been specializing in the placement of guaranteed cost workers’ compensation for years. Our staff has many years of experience in the areas of underwriting, claims management, and loss prevention. Whether your client is a minimum premium account or a tougher to place risk, Caitlin Morgan is here to help you meet your clients’ needs. Please give us a call at: 877.226.1027.
Sources: I.I.I., Fitch Ratings, MarketScout