Top 25 Workers’ Compensation Insurers Grow Premium 29.8% Based on June 30, 2012 Results Versus June 30, 2011

By Steven J. Groeschen

Demotech’s review of second quarter 2012 data, as reported by insurers to the National Association of Insurance Commissioners, shows that industry workers compensation direct written premiums continued to grow.  The question remains, however, whether these increases are enough to improve profitability given adverse loss cost trends and low investment returns.

Workers compensation insurers reported a 9.1 percent increase in direct premiums written during the first six months of 2012 versus the same period in 2011.  Coupled with the 9.6 percent increase observed last year, premium writings are significantly higher than in 2010 yet have recovered only half of the decline from their peak in 2006.

The top 25 workers compensation insurers, ranked by the highest direct premium growth, reported a 29.8 percent increase during the first six months of 2012 versus the same period in 2011.

As noted in an article published in the June 8th issue of Insurance Journal, premium growth for Texas Mutual Insurance Company was driven by the financially strong Texas economy.  AmTrust Financial Group’s acquisition of workers compensation business that had formerly been written by Majestic Insurance Company resulted in premium growth for Technology Insurance Company, Wesco Insurance Company and Security National Insurance Company.

Several of the top 25 companies – Travelers Property Casualty Company of America, Cypress Insurance Company, Employers Compensation Insurance Company, Markel Insurance Company, Insurance Company of the West, and Zenith Insurance Company – wrote the majority of their premium in California, where these companies and their competitors filed for significant rate increases over the past year, in line with bureau loss cost increases.  However, the recently proposed system reforms create additional uncertainty about future claim costs and bureau recommendations in California.  Most of the other top 25 companies are National or Near National companies which benefited
from the rate increases that had been filed in a majority of states over the past year.

Factors which continue to pressure workers compensation financial results include the weak economic recovery, less favorable claim frequency trends, increases in medical and pharmaceutical costs, price reductions to retain renewal business and decreases in investment income which might offset these unfavorable loss cost trends.

Click here to read the entire article.