Without disclosing the magnitude of rate changes they may be facing, Marsh reported Tuesday that employers with large concentrations of employees are experience workers compensation rate hikes and change in policy expiration dates.
Factors such as higher claims costs, historical unprofitability, and a continued weak interest rate environment, are now being compounded by uncertainty around the Terrorism Risk Insurance Program Reauthorization Act, said Christopher Flatt, Marsh’s Workers Compensation Center of Excellence Leader, in a statement about the briefing titled, “Pending TRIPRA Expiration Impacts Workers’ Compensation Industry.”
Barring Congressional action, TRIPRA will expire on Dec. 31, 2014, and the uncertainty over its reauthorization has also resulted in less capacity for employers, Marsh says, highlighting those in high-profile industries, major cities or with high employee concentrations.
The briefing suggests that carriers are adding an NCCI endorsement (WC000114) which states:
“The premium charge for the coverage your policy provides for terrorism or war losses…may continue or change for new, renewal, and in-force policies in effect on or after December 31, 2014 in the event of TRIPRA’s expiration, subject to regulatory review in accordance with applicable state law.”
Beyond that, some insurers are even setting policy expiration dates on 2014 programs to coincide with the anticipated expiration of TRIPRA—or effectively pushing the challenges created by the uncertainty of the federal backstop onto the original insurance buyer.
Marsh notes that insurers and reinsurers are focusing on catastrophe models to understand aggregation issues of certain concentrated employers, and recommends that the employers provide information to help their causes—such as the number of employees working at peak shifts that would be exposed to terror events, or the number of workers who telecommute.
Marsh also recommends that workers comp insurance buyers provide information about building and employee security procedures to their carriers.
The briefing also includes a graphic summarizing three bills that have been introduced in the U.S. House of Representatives to extend TRIPRA—H.R. 508, H.R. 2146, and H.R. 1945—with details about the number and
parties of sponsors, terms and reports required on long-term affordability and availability of terrorism insurance.