Is the workers’ compensation industry disappearing? Is there a nationwide movement to eliminate workers’ compensation insurance? These questions are both important, and directly related to the fact that a recent study shows that workers’ compensation insurance profits recently were reported at a record high.
A recent study by Conning, Inc. revealed that workers’ compensation insurance profits experienced the lowest loss ratio seen since 1995. In addition, over the last six years, premiums for workers’ compensation insurance have been steadily rising. The study determined that these premiums were boosted by the improving and expanding economy. However, the study also determined that this growth was not sustainable and not likely to continue. In 2016, the rate of filings indicated a softening market. This was attributed to the rise in medical costs. The fact that 2016 was a banner year for workers’ compensation insurance companies came on the heels of 2015, which had also seen record growth and profits. In 2015, the combined ratio for workers’ compensation was 95.4, which was a significant improvement over the ratios demonstrated in 2011-2014, which ranged from 117.3 to 102.4. For example, in 2015, Travelers Companies was the top workers’ compensation writer with a direct written premium of $4.47 billion dollars and net written premiums of $3,96 billion.
Other studies and opinions provide harsh criticism to the rising costs. The California Applicants’ Attorneys’ Association released a statement in April 2016 indicating that the rising rate of premiums has not gone to improve care provided to workers injured on the jobs. Rather, they are concerned that the increased profits to the insurance companies have actually just resulted in lining the pockets of the insurance executives.
Mounting pressure on the insurance companies will likely lead to a dip in insurance premiums. Simply stated, the high insurance premiums cannot continue to be justified in the face of the reduction in the amount of work-related injuries and increased safety standards. Moreover, certain organizations are concerned that even in light of the higher insurance premiums and record profits, care for injured workers has dipped. Some are even citing a reduction of 70% in benefits for employees, and medical professionals dropping employees from their care in the face of frustrating road blocks thrown up by the workers’ compensation insurance companies.
If you have questions about the ever-changing workers’ compensation insurance market and how it can impact your business, contact me today at 714-516-8188. I look forward to talking with you about your business and workers’ compensation.