WorkComp Advisory
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National trends in Workers’ Comp premiums changing

Although the soft commercial market continued throughout the third quarter of 2008, deteriorating underwriting results may mean there will be a turn in the pricing cycle. According to Evan Greenberg, chief executive of Ace Ltd, “The end of the soft market in insurance has arrived.” According to Greenberg, premiums charges in most lines of commercial insurance have abruptly stopped falling and will gradually start to rise.

Industry expert, Joe Paduda notes there are two major factors that will reverse the trend of dropping rates: "Medical trend in the group world is approaching double digits. Historically the work comp medical trend rate has been somewhat higher than group trend. The investment market has imploded, likely driving down the value of the funds held for reserves and surplus. While most investments are in what used to be thought were 'safe' instruments, it may well be that regulators and rating agencies, newly sensitized to the potential problems with even 'safe' vehicles, will require carriers to take down the value of funds held in reserve."

In California, often a precursor for the entire country, the State Compensation Insurance Fund announced November 13 that it will boost its Workers' Compensation insurance rates by an average 8.9 percent in January, ignoring the California insurance commissioner’s call for a smaller increase.
The National Council on Compensation Insurance has proposed a significant rate increase in Florida’s workers’ compensation rates, the result of a recent state Supreme Court ruling. The ruling, Emma Murray v. Mariner Health Inc., essentially struck down a cap on fees to lawyers who represent injured workers.

The NCCI, which proposes rates for insurers in Florida, is asking for an 18.6 percent rate hike over a two-year period. If approved, the hike would apply to new and renewed policies effective on or after March 1.