Top 25 Workers’ Compensation Insurers Show 34% Increase in Premium Growth

Results Based on Premium Growth June 30, 2010, Versus June 30, 2009

Approximately one year ago, I discussed the premium growth reported by insurers with the top 25 gains in workers’ compensation insurance premium volume. As I wrote that article, the unemployment rate in the United States was 9.4 percent and the Gross Domestic Product (GDP) in the latest quarter shrank about 1 percent. One year later, as we revisit the top 25 gainers in workers’ compensation insurance, the unemployment rate at the end of July was 9.5 percent and GDP for the first quarter of 2010 increased by 2.7 percent.

One year ago, over the period June 2008 through June 2009, the premium writings of the top 25 increased an astonishing 36 percent over the prior period. This year, although the reported increase in premium volume for the top 25 insurers writing workers’ compensation was nearly 34 percent, the composition of the top 25 gainers has changed. In the latest 12 months, carriers with relatively limited writings in prior periods reported the largest dollar gains in this period.

Two unaffiliated companies are in the top 25 gainers, Sparta Insurance Co. and Electric Insurance Co. Otherwise, members of insurance groups dominate the top 25 gainers. Star Insurance Co., a member of the Meadowbrook Insurance Group, served notice on larger competitors that it is interested in workers’ compensation insurance. Over the review period, Star Insurance reported a $61.3 million increase its workers’ compensation direct premium written.

Despite some industry experts, including presenters at the National Council on Compensation Insurance’s Annual Issues Symposium, remaining uncertain as to whether the underwriting cycle has seen an inflection point, the workers’ compensation insurance market remains active. Six of the most recent top 25 gainers were top 25 gainers a year ago. However, 11 of last year’s top growers declined in workers’ compensation premium over the last 12 months.

From a rate level perspective, large declines in workers’ compensation insurance claim frequency have moderated the increased cost of medical or indemnity claims.

In an economy with 9.5 percent unemployment, we expect employees to tough things out and do what they can to retain their jobs. However, when the economy begins to create jobs at an accelerated pace and the unemployment rate declines, will the frequency of workers’ compensation claims remain level or increase? If claim frequency increases, will carriers that grew their workers’ compensation insurance premium volume remain committed to this line of business?

Stay tuned. We will find out together.

Topics Trends Carriers Workers' Compensation Talent Pricing Trends