The market for workers compensation insurance is in a recovery phase of the underwriting cycle after several years of poor results. In particular, premium rates continued to increase meaningfully through the first half of 2013, coupled with stabilizing loss trends promoting improved near-term underwriting performance.
Executive Summary
In spite of recent improvements in the workers compensation line, which produced lower levels of underwriting losses in recent years, the potential for enduring industry underwriting gains is unlikely given competitive forces, inherent claims expense and reserving uncertainty, and regulatory and legislative complexity, according to Fitch Ratings' James Auden.The potential for enduring industry underwriting gains, however, remain less likely, given competitive forces, inherent claims expense and reserving uncertainty, and regulatory and legislative complexity.
Chronic Underperforming Segment
As the largest individual commercial lines segment, based on premium volume, workers compensation is a key driver of underwriting performance for the U.S. property/casualty insurance industry. Relative to other large commercial lines, including other liability, commercial auto and commercial multi-peril, workers compensation has stood out in recent years as one of the weakest industry segments in terms of underwriting performance and loss reserve strength.
