Workers comp, commercial property rates still rising: Fitch
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The ratings outlook for commercial lines insurers is stable and rates are expected to rise, but the workers compensation line “remains one of the more underperforming segments,” according to a Fitch Ratings Ltd. analysis.
Overall, most commercial insurers that the New York-based ratings agency evaluates have maintained strong capital levels, enabling them to withstand considerable adversity, including catastrophe losses and an extended period of subpar underwriting results, Fitch said Tuesday in the report, “Commercial Lines Market Update.”
Insurer loss ratios, and thus profitability, are expected to improve in 2013 due to significant increases in rates during the past 18 months, Fitch said. Overall, commercial written premium volume increased about 4% in 2012 for a second consecutive year of growth.
“Premium rates are increasing across nearly all segments, with the greatest increase in hardest hit segments, such as workers compensation and commercial property,” Fitch said. “Momentum for rate hikes will carry into the latter half of 2013, though exposure growth is more sluggish amid modest economic growth.”
However for workers comp, 2012 was the fourth consecutive year of unfavorable reserve development and the line “is likely to continue showing reserve deficiencies going forward,” Fitch said in the report.
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