Rising medical costs, insurer profitability affect overall pricing
Employers renewing their workers compensation policies likely will pay more for the coverage as claims costs rise and insurers' combined ratios deteriorate, experts say.
Purchasers of primary and excess workers comp insurance are seeing price increases, mostly in the single-digit range, brokers and insurers say, but insurers are fighting to hold on to favored accounts.
There also have been some increases in employer retention levels as insurers tighten their underwriting standards in an attempt to improve the line's profitability, they say.
“What we are seeing happening this year is that there is a growing recognition that changes need to be made in terms of workers compensation profitability,” said Curt LeBeau, VP of insurance operations in Milwaukee for United Heartland, a unit of Accident Fund Holdings Inc. “And I think most carriers are taking some type of action to try to improve their results in the workers comp line.”
Brokers also say underwriting standards are tightening.
“They are actually underwriting and looking at losses,” said Bob Jacobsen, area VP for brokerage Arthur J Gallagher & Co. in Chicago. “The discipline is certainly back in the marketplace and, unfortunately for buyers, that means they are all going to pay more, at least in the guaranteed-cost market.”
In general, the “cream of the crop” among guarantee-cost accounts are experiencing price increases ranging from about 5% to 7%, with some 10% increases, particularly in the Midwest, Mr. Jacobsen said. Similar accounts with loss-sensitive programs may see their pricing stay flat, “but those are harder to come by,” he added. (Full Story)