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Whither Work Comp?

Hopefully it isn’t “wither”…

There’s been a good deal of reporting on trends in work comp premiums and coverage of late, with a good piece in WorkCompWire on Marsh’s market survey describing a softening market for many employers.  The WCW article comes on the heels of one in Insurance Journal announcing the “good news” that the P&C industry returned an underwriting profit for the first time in four years.

It’s a bit disturbing that the industry had to rely on investment income to make a profit for three of the last four years, nonetheless the news from AM Best that net income increased 60 percent to $63 billion in 2013 is encouraging news indeed.

WC is a relatively small part of the P&C industry, typically about 11 percent of total premium.  Here are a few quick takeaways.

So, what does this mean?

When profits climb, the market typically starts to soften as capital comes in to work comp, seeking to take advantage of the financial returns. Carriers get more competitive, seeking to add share, and there are more carriers bidding on employer business.

I’d expect this will happen this time, and we’ll see prices level out this year in most states.  This may not be readily apparent as the rates insurance companies file with regulators may not change much, but discount arrangements may well increase.



3 thoughts on “Whither Work Comp?”

  1. Joe,
    If the industry is indeed “under reserved”, (which I am sure it is), then does the “profit” of the industry take this into account? Or is the profit illusory, because it is does allow for under reserving?

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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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