Direct Premiums Written Drop for Top 50 Workers’ Comp Insurers

As of March 2011, the unemployment rate in the United States was reported to be 8.8 percent, a marked improvement from the 10.1 percent rate reported in October 2009. The gross domestic product (GDP) has increased for six straight quarters, culminating in fourth quarter 2010 growth of 3.1 percent. Despite these improving economic conditions, the top 50 workers’ compensation companies had an average 2.7 percent decrease in direct premiums written for 2010, a continuation of the average 8.3 percent decrease observed in 2009.

The top 50 workers’ compensation companies wrote 52.9 percent of the 2010 direct premiums written of all companies reporting, leaving 685 other companies 47.1 percent. The top 50 workers’ compensation companies had 53.2 percent of 2009’s direct premiums written.

Entering the top 50 insurers this year are Hartford Accident and Indemnity Co. and Companion Property and Casualty Insurance Co. Exiting the Top 50 this year are Liberty Mutual Insurance Company and Southern Insurance Co.

Members of insurance groups dominated the top 50 in 2010, as Liberty Mutual Insurance Group had nine companies listed. Hartford Fire & Casualty Group and Travelers Group followed with seven companies each in the top 50.

Only 18 of the top 50 companies reported premium increases in 2010. Companies with increases greater than 25 percent include Illinois National Insurance Co., Hartford Accident and Indemnity Co., Travelers Property Casualty Co. of America, Star Insurance Co. and Companion Property and Casualty Insurance Co. The last three companies mentioned — Travelers, Star and Companion — experienced significant growth in California. It will be interesting to see the financial results on these companies in a few years given the indication for a 40 percent pure premium increase recently presented by California’s Workers Compensation Insurance Rating Bureau.

Profitability for this line of business is still of concern given current low investment yields, increasing commodity prices and uncertainty about the impact of the federal health care law. Premiums may not increase rapidly due to the (thus far) jobless recovery, but given the overall economic improvement, it appears that the substantial premium decreases reported in recent calendar years may not continue in the future.