Workers compensation rates in 2018 will be mixed, with pricing for some programs expected to be flat to down and others seeing spikes, according to a market prediction from the broker USI.

In other words, market trends should continue as they did in 2017, according to the report.

“In 2017, we saw a continued downward trend in workers compensation, including a reduction in premium rates overall, particularly in the loss-sensitive marketplace. Given the lack of deterioration in many larger carriers’ combined loss ratios, we expect similar aggressive targeting to grow market share in 2018,” the USI report predicted.

USI said that returns for low-risk investment opportunities are still limited. On the one hand, there is both aggressive and prudent pricing coming from carriers seeking to grow premium. On the other, clients with “poor loss results, declining financials,” and residences in states such as Florida, California and New York are facing underwriting discipline (as are insureds in more volatile industry classes).

USI predicted that carriers will try to keep clients with specific loss severity or if they are pursuing more premium savings.

For 2018, USI predicts pricing will stem from a desire to maintain or increase market share, with goal of profitable market share driving those strategies.

Highlights of USI pricing and other predictions in the workers compensation space:

  • Loss-sensitive programs will either see flat rates or hikes as high as 5 percent, assuming clients have clean or improving loss experience. For those that are seeing worsening loss experience, rates in this category will increase more than 5 percent, and carriers will likely adjust their retention levels.
  • For guaranteed-cost programs, USI sees rates ranging between 10 percent decreases to 10 percent jumps. Clients with very clean loss experience would escape changes, and pricing would also vary due to a client’s “specific state payroll distribution due to states’ legislative pressure on adequacy of rates,” according to the report.
  • Medical cost inflation is expected to rise 6 percent year-over-year, and this upward trend will continue to affect workers compensation and loss liability totals.
  • Expect more increases in cost shifting from healthcare plans to workers compensation. Blame profitability problems due to the Affordable Care Act for part of the trend.

USI’s full report is the 2018 USI Insurance Market Outlook report. The report also forecast trends in commercial market areas including property, general liability, umbrella liability, international, environmental, aviation, crime, cyber, medical malpractice; and kidnap, ransom and extortion.

Source: USI

Topics Profit Loss Workers' Compensation Talent