The troubled workers? compensation line of business got a break in 2011 as employment and payrolls stabilized and overall net premiums written increased by 10 percent, according to an A.M. Best report.
Overall underwriting results for the aggregated workers? comp line for companies and state funds improved slightly, as the combined ratio declined to 117.8 in 2011, from 118.1 the previous year.
The report, titled ?Despite Favorable Pricing Trends, Profitability Challenges Persist,? says that the premium growth of 10 percent outpaced that of U.S. commercial lines, which saw a reported 4 percent increase in net premiums written for the year.
In addition, the rise in net premiums written for the workers? comp line comes after five consecutive years of declines, from 2006 through 2010, when a combination of competitive pricing, a series of consecutive rate increases (often related to statutory reforms), poor employment and challenging macroeconomic conditions put pressure on the sector.
However, A.M. Best said it expects that profitability for the workers? comp line will remain a challenge despite a more favorable pricing environment, due to an increasingly competitive operating environment and the cumulative effect of rate increases.
The A.M. Best report also notes:
- Despite the 10 percent increase in net premium written in 2011, premium volume remains 23.8 percent lower than its peak of $49.2 billion in 2005.
- The largest workers? comp insurers remained unchanged for a third straight year, with Liberty Mutual Insurance Companies retaining its top market position, followed by American International Group.
- Direct premiums written increased in all but three jurisdictions, excluding those with monopolistic state funds. California, with the highest direct written premium in the United States, posted a 10.1 percent increase in 2011. Of the largest 10 states, New York has the highest percentage increase in DPW, at 14.8 percent in 2011.
- For the A.M. Best workers? comp composite, which consists of companies that write predominantly workers? comp insurance and includes state funds and experience for non-workers? comp lines of insurance, the combined ratio deteriorated slightly to 123.6 in 2011 from 122.2 in 2010, the highest recorded combined ratio for the composite over the past 10 years.
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Source: A.M. Best
Source: http://www.claimsjournal.com/news/national/2012/11/13/217337.htm
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