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Property and Casualty – Soft Market continues…

RIMS will release it’s annual review of the P&C market in March, and early indications are the soft market persisted throughout 2004, with two notable exceptions.
Across the board, prices declined in all lines of coverage except Employment Practices Liability and Workers’ Comp.
This has been good news for buyers and sellers alike; prices have come down, albeit modestly and without the cutthroat activity of the late nineties. This bodes well for insurers, as their overall returns on equity still are well below the S&P 500 and surplus levels are not excessive.
Interestingly, WC rates have not dropped, or if they have, not consistently or by very much in any jurisdiction. This despite improving loss ratios in many states and at many insurers.
This last note is encouraging. Medical costs in WC are still increasing at 12% annually, most insurers have not figured out how to address medical costs, and they are wisely (giving them the benefit of the doubt) choosing to not cut premiums. Here’s hoping this sanity is not temporary.

Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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