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Workers’ Compensation Market Correction Coming 2018

Workers’ Compensation Market Correction Coming 2018Given the recent devastating hurricanes, workers’ compensation premiums are expected to rise in the coming year. As Harvey and Irma left catastrophic destruction in their wake, insurance companies are struggling to recover from such back-to-back historic losses. Willis Towers Watson predicts a definite market correction for the beginning and 2018 and beyond, which will affect commercial Workers’ Compensation Insurance for both large and small markets.

It’s still undetermined how much damage 2017’s fall hurricanes have caused, but experts estimate it could be upwards of $100 billion. Given such substantial loss payouts, the insurance industry will demand more from their premium payments in the coming year to account for this.

According to Carrier Management, the Willis Towers Report suggests that insurers who book heavy losses will face pressure to make up for the shortfall in non-property premiums, which means other lines may also see rate hikes beyond commercial insurers.

Although the insurance industry will want to hike up rates, competition from other carriers prevents them from getting out of hand. However, the steady decrease in insurance premium rates will come to an inherent end at the start of 2018.

Willis Towers Watson said it expects non-cat property risks to rise an average 5 percent in 2018, with cat-exposed risks jumping 10 percent to 20 percent on average. Cat-exposed risks with losses, on the other hand, could rise as much as 25 percent, the report predicted. Casualty general liability and umbrella risks, however, will see rates range from flat to 3 percent higher compared to 2017. Excess risks will stay flat, and workers compensation will see a range of negative 2 percent to positive 2 percent rate changes. Auto will see rate hikes of 3 percent to 8 percent, and international will drop from 5 percent to 10 percent, according to the report.

As far as reinsurance premiums go, the extensive losses could reflect a change in those rates, as well. While historically these policies are renewed at better, more competitive rates, it’s expected that these discounts will no longer be applied in order for insurance companies to recoup some of the money for hurricane losses.

Providing property insurance is typically profitable for insurance carriers. However, with these devastating storms, the margin of profit has been significantly shaken up. Insurance carriers predict some sort of storm and weather damage, but back to back category 5 hurricanes are not something that they are used to covering, especially within the same calendar year.

About ASIA Workers’ Compensation

Associated Specialty Insurance Agency, Inc. has been “The Workers’ Compensation Specialist for Brokers and Agents” for the past two decades and is committed to providing brokers and insurance agents across the East Coast with expertise and services to develop a Workers’ Compensation policy. For more information about how we can assist you with claims management, anti-fraud measures, and more, call (610) 543-5510 to speak with one of our professionals.

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