Workers compensation insurers have seen some recent improvements in their financial performance, but observers are concerned that underfunded reserves and low investment returns could dull the bright spots for the near term.
“It’s nice to see the (workers comp rates) turn around, but three years of positives definitely don’t offset five years of declining rate environment,” said Gordon McLean, senior financial analyst with Oldwick, N.J.-based rating agency A.M. Best Co. Inc.
Net written workers comp premiums reached $41 billion in 2012, up 9.5% from $37.5 billion in 2011, Best said in its November workers comp “Segment Review” report. Meanwhile, Best said workers comp insurers saw their combined ratio decline to 110.3% in 2012, down from 117.8% in 2011 and the first combined ratio decline for the U.S. comp industry since 2006.
