It was predicted that 2013 would be a challenging year in the workers compensation marketplace and that certainly proved to be the case. In 2014, I would expect the challenging conditions highlighted by the current trend of a tightening work comp market to continue.
Some of the challenges facing workers comp insurance carriers are brought to light by the recent financial concerns of notable property and casualty carriers.
We are not that far removed from Ullico entering into receivership. Recently, Tower Group has been downgraded and public losses have pressured stock prices of Tower and QBE. Some carriers have been forced into substantial lay-offs and or restructuring to address the pain created by claims from the 2008-2013 period.
Time will tell if carrier responses to the challenging financial climate are successful. In fact, AmTrust Insurance (and its affiliates) just acquired Tower Group, and it would not be surprising if the most financially stable carriers acquired those pressured by the difficult financial climate.
Another related dilemma is that many states continue to have significant increases to workers comp rates. In Missouri, most carriers are taking a double-digit increase in 2014. In Delaware, there has been a recommendation for almost a 40% increase, but it was not approved. California had huge rate increases in 2013, and additional substantial rate increases are expected in 2014.
These rate increases are required as many insurance carriers in the workers comp marketplace have been suffering substantial losses. However, the increased rates will certainly create additional pain for business owners. Larger businesses may consider options more and more where they take on some of the risk as opposed to only considering guaranteed cost options.
Numerous states have attempted to remedy some of the issues facing the workers compensation marketplace by changed regulation or legislation. Illinois, Missouri and Oklahoma are all states which have made notable legal changes related to workmens comp recently.
There is a good chance that 2014 is the year that could truly separate carriers with strong financial results from carriers that have been trying to outrun losses simply by writing additional premium. Carriers doing well financially, such as The Hartford, Travelers Workers Comp, First Comp Insurance /Markel, Employers, Missouri Employers Mutual and Guarantee Insurance Company seem well poised to continue writing business at a profitable and fair rate. On the other hand, carriers pressured by recent poor financial results will likely be forced to undergo significant strategy changes.
Lastly, it has been a pleasure to work on finding insurance solutions for so many clients over the past year. Sometimes the goal is to save money; sometimes it is important to locate adequate protection. It is always satisfying to tailor a solution to an individual client’s preferences.
I wish that your families and businesses prosper in 2014, and I look forward to continuing to find the best insurance solutions for my clients in the year ahead. Have a great 2014!
