New players enter workers comp market amid softening ratesReprints
The workers compensation insurance market continues to soften amid rising competition.
Experts at Lockton Cos. L.L.C., Willis North America Inc. and Aon Risk Solutions say clients renewing their workers comp coverage at midyear are seeing rates that are essentially flat.
“There is a lot of competition to write new business,” and insurers want to hold on to existing accounts, said Kurt Narron, Houston-based vice president and account executive at Lockton.
While many large employers are seeing rates that are flat to slightly higher, middle-market companies are seeing about a 2% rate increase, with slightly higher increases for states like California, said Pam Ferrandino, executive vice president and casualty practice leader at Willis North America Inc. in New York.
Still, workers comp rates for renewing accounts are about 2% lower than they were this time last year, she said.
Stephen Hackenburg, chief broking officer of the national casualty practice at Aon Risk Solutions in New York, said it's possible that a large employer that's “taking an appropriate deductible, has good loss history (and) doesn't present huge catastrophic loss potential to the industry” is seeing reductions. “In some cases, significant ones,” he added.
L.L. Bean Inc., which has about 11,000 full-time and seasonal employees covered under workers comp, does “a variety of things to keep prices down,” said Deborah R. Roy, the company's director of health, safety and wellness in Freeport, Maine.
“What we do is a lot of prevention,” which includes conducting post-job offer examinations and implementing safety management systems in large operating areas that engage and empower workers, she said.
While the best accounts may be seeing greater decreases, the average workers compensation rate reduction for large employers is 0.3%, while the stand-alone, excess workers comp market is seeing an average rate increase of 3.7%, Mr. Hackenburg said of Aon's data.
Sources attributed large accounts' more favorable pricing to increased competition.
It's unclear how long the soft pricing environment will last, sources said.
“We're still seeing adjustments on prior-year rate increases,” so there will eventually “be a floor to the softening,” Ms. Ferrandino said.
For now, if companies are focused on preventing injuries, keeping costs down and managing claims, insurers will want to write that business, Mr. Narron said.
“Our payroll has gone up in recent years because we've been (growing and) adding stores,” L.L. Bean's Ms. Roy said. Still “we've reduced our workers comp costs in the seven years I've been here by about one-third.”
L.L. Bean will renew its comp coverage with Maine Employers' Mutual Insurance Co. in March 2016, Ms. Roy said, adding that the company was insured by Liberty Mutual Insurance Co. outside of Maine until “a few years ago” when the mutual insurer was licensed in other states.