Workers compensation pricing has been relatively moderate for upcoming policy renewals despite uncertainty about how the comp market will be affected by the expiration of the federal terrorism backstop, observers say.

Sources from Arthur J. Gallagher & Co., Marsh L.L.C., Lockton Cos. L.L.C. and Willis North America Inc. say employers in the midst of renewing their workers comp policies for early 2015 typically are seeing either no pricing changes or rate increases between 3% and 5%.

“What we've started now seeing is some of the rate backing down,” said Pam Ferrandino, executive vice president and casualty practice leader at Willis North America in New York.

John Liston, Tampa, Florida-based managing director of insurance and risk management and leader of Gallagher's workers comp practice, said that in a review of 25 recent workers comp renewals, 17 accounts saw rate decreases for 2015, seven had rate increases, and one policy had no pricing change.

The National Council on Compensation Insurance Inc. reported in November that private workers comp insurers are expected to have an aggregate combined ratio of 96% for 2014, a number that has fallen steadily since reaching 115% in 2010 and 2011.

While insurers pushed for higher workers comp rate increases during unprofitable years, Mr. Liston said insurers seem to be moderating their pricing for accounts that are seen as favorable risks now that the workers comp line is seeing improved financial performance.

“Today on good business or average business, they're fighting to keep” those accounts, Mr. Liston said.

In addition to moderate pricing, sources also say that insurers are becoming more lenient on credit and collateral requirements for workers comp renewals. For instance, Mr. Liston noted that one workers comp insurer dropped its minimum deductible to $100,000 for a 2015 policy, down from $250,000 this year.

Insurers are “being much more discreet because I think they've kind of healed themselves,” he said.

The favorable workers comp rate environment hasn't reached all employers, however. Michael Liebowitz, senior director of insurance and enterprise risk management with New York University in New York, said the school's workers comp premiums increased 30% when it renewed its policy on Sept. 1.

Mr. Liebowitz said the university's workers comp insurer, which he declined to identify, had assured him in prerenewal meetings that NYU could expect to see a “competitive” rate for 2015. However, he said he was informed of the 30% policy rate hike about two weeks before renewal, when it was too late for the university to shop around with other insurers.

“They turned to me and said, "In two years, we don't like the development in a handful of cases, so therefore we're going to raise your premium,'” said Mr. Liebowitz, who said the university has 15,000 employees and a fully insured, guaranteed cost workers comp program. The school has worked with its current workers comp insurer for about 14 years, and Mr. Liebowitz said NYU plans to change insurers next year.

Despite NYU's experience, Willis' Ms. Ferrandino said the workers comp market is showing a “robust” appetite for “national accounts or accounts with large retentions.”

“There's increased competition on really most classes of business, particularly in the lower-hazard risks, and there is a significant amount of competition on loss-sensitive (accounts) or on accounts that are able to make a higher deductible,” said Christopher Flatt, managing director and leader of Marsh's Workers' Compensation Center of Excellence in New York

In order to position themselves as attractive risks in the current workers comp market, sources say companies should be prepared to show they have good loss experience and that they are actively utilizing safety programs that can reduce workplace accidents and workers comp claims.

“More insurers will preinspect or interview a client before quoting than have typically taken place in the past,” said Mark Zwickel, executive vice president of Pacific operations for Lockton in Los Angeles.