Overall, the 2013 Workers Comp Market Conditions are becoming more challenging as industry-wide hardening continues. Carriers continue to pull out of the marketplace due to financial pressures faced by workers comp providers. For many business owners, the days of focusing on cost alone for workers comp insurance are a thing of the past. In many cases, finding any coverage solution is the goal.
With respect to carriers providing workers compensation insurance, the 2013 Workers Comp Market Conditions are essentially a culmination of conditions that have been building for several years. The industry has been losing money for a number of years. Rising medical costs have exacerbated the financial pressure on carriers. Additionally, carriers are faced with more restrictive capital models which limit their appetite for risk. Additional concerns such as uncertainty for continued government support of terrorism related coverage further limit the aggressiveness of carriers.
To provide further insight into the lay of the land from the eyes of an insurance carrier, it is important to realize that the workers compensation insurance industry has been running at a ratio of around 1.20 for the last 3 years. In other words, insurance companies have been paying out $1.20 for every $1.00 they receive. That is obviously bad business and not sustainable. The response by most carriers to attempt to change that has been to increase pricing and be careful about which businesses they quote; in other words to seek out companies with the lowest claims potential and thus, the most profitability.
Although the 2013 Workers Comp Market Conditions are experiencing a lot of turbulence, most of our insurance carrier partners feel as stable as I recall. They are still aggressively going after business that they feel are good risks.
In general, businesses that are having the most difficult time finding coverage in the standard market are blue-collar oriented or healthcare related. However, we still have several carriers such as Patriot Underwriters, Accident Insurance Company, Amerisafe and FirstComp that are aggressively quoting blue collar businesses and other tougher risks, while FirstComp is starting to roll out a new pay as you go product.
Carriers such as Hartford, Travelers, AmTrust Workers Comp and Employers appear to be becoming more careful with the types of risks they’ll insure, but they continue to offer wonderful pricing for targeted clients.
The transportation industry has always been hard-pressed to find open market coverage and that remains the same. If it happens to be a situation where traditional carriers are not an option, we have access to the assigned risk pool, or State Fund, in most states.
Businesses that have a good loss history in the assigned risk pool may be able to reduce their rates by moving back to open market insurance carriers as overall market conditions improve in the coming years.
