Workers Comp Blog

Profitability Rising in California and Nationwide for Workers’ Comp Industry

Is the California Workers’ Compensation industry experiencing a peak in profit? According to Conning, Inc.’s new Insurance Research study, this is true. The results from the 2015 reports show loss ratios, as a whole, were the “lowest we have seen since 1995,” as stated by Vice President of the Conning study, Jerry Theodorou (https://www.conning.com/pressrelease-detail.aspx?id=14717). This has been the outcome of the industry’s long-time focus on “safety and loss prevention programs, medical loss containment and return-to work initiatives” for their workers’ compensation insured’s, according to Steve Weberson, head of the Conning study. In addition to low loss ratios, quote and policy premiums have also increased, correlating to the increase in payrolls as a result of the growing economy.  Thus the California Workers’ Compensation industry has been flourishing in the past 20 years to say the least.

However, this momentum has hit its highest point, and the workers’ compensation industry will begin to soften by the end of 2016. After analyzing performance data over the course of ten years from a wide range of California Workers’ Compensation insurers as well as evaluating the results of a survey conducted throughout the industry, the Conning study concluded that the pressure to gain “investment income” and the “environmental and medical costs” companies are required to pay are projected to lead to a decline in the industry’s combined ratio, or profitability, in the near future for workers’ compensation quotes.

So what is the best way to combat these declines as a workers’ compensation insurer? Prioritizing the underwriting performance ahead of growth, according to the Conning study, is the best strategy to stay successful in the forthcoming years. By ensuring that the industry’s underwriters remain thorough and precise, profitability has a chance of rising once again.