At the turn of the year, workers’ compensation levels remained unchanged, and the industry is still one of the most desirable and least volatile sectors for insurance companies, experts say.
The year-long pricing trend reflects reductions in the frequency of injuries, as safety in the workplace is improved, and increased capacity when new players increase competition in the market.
The claim cost ratio increases as the workforce ages, but the buyer’s market for comp is unlikely to change, experts say.
“The marketplace continues to be extremely competitive for buyers of the Workers Comp product,” said Mark Moitoso, Atlanta-based risk practice manager for Lockton Cos. LLC.
The competition is run in part by new chief agents and chief insurers “who come online who want to write worksheets”; and “the traditional writers who continue to lean in and confess their desire to grow,” he said.
“There are a lot of players who are there in the game, whether they are individual operators, MGUs and MGAs, captives. Placement Services Inc. a very soft level. “
Profitability during otherwise turbulent business hours is also a driving force.
“You have eight years of profitability, a combined ratio below 100 and the last five years below 90%. There is a lot of competition for workers ‘compensation today,” said Casey Petersen, North America’s primary accident manager for Willis Towers’ Watson PLC in Chicago.
The competition has also led to a bundling trend for companies looking for more complicated coverage, he said.
The insurance companies are willing to offer capacity for more difficult industries if they can secure a policyholder’s workers, Petersen said. “Because the industry all carriers want to write about is the workers’ business, they will offer the more scary industries.”
Inflation, which has been rising for several months, has not yet had a significant effect on the comp sector, experts say.
“Everyone is worried about general price inflation. But the information we are looking at shows that it does not necessarily translate into workers ‘costs, as workers’ medical costs are not affected by inflation,” said Jeff Eddinger, a senior division manager for Boca Raton, Florida-based National Council. on compensation insurance.
Increased wages, which could lead to higher disability benefits, are not yet a problem for workers’ insurance companies, Moitoso said.
An increased salary list also leads to increased income for insurance companies because the premiums are based on salaries, he noted.
Covid-19, which led to several states adopting laws on employment conditions for workers for first responders and others, also had little effect on renewals after the turn of the year, experts say.
Most presumption laws have expired and the claims filed were generally not expensive. However, long covid is still a problem.
“The vast majority of the claims we judged were really short-term, lost claims without medical payments,” Moitoso said. “The unknown is, what are the consequences for long-distance carriers? We do not know yet. It is still a risk, but in the end the vast majority of covid (claims) were very small financially affected claims.”
Mr. Eddinger, whose organization earlier this year announced plans to study long covid claims, said the volume and trajectory of those claims are unclear. “I think it just gives some uncertainty to some companies,” he said.