After years of reductions, workers compensation midyear renewals saw some flattening, with insurers competing to balance comp business with other more volatile lines, according to experts.

“This is probably the most stable line of coverage, the one everybody wants to underwrite,” said Jessica Cullen, New York-based managing director of the casualty practice at Arthur J. Gallagher & Co.

S&P Global’s 2021 U.S. Property & Casualty Insurance Market Report released in June said that “the workers comp line ... has produced one stunningly low calendar-year combined ratio after another. The 87% result for 2020 marked a fourth straight sub-90% combined ratio.”

The flat renewal is unrelated to the COVID-19 pandemic and follows years of decreases amid continued low interest rates, experts say.

The flatlining was “inevitable without COVID” with multiple years of rate decreases that accumulated, said Mark Moitoso, Atlanta-based head of risk practices for Lockton Cos. LLC. “We are at a normal state of the market.”

A year ago, some experts expected that uncertainty surrounding workplace COVID-19 claims would complicate renewals — a concern that has evaporated after COVID-19 presumption regulations in more than a dozen states didn’t trigger the expected surge in claims.

“What strikes me is how wrong everybody was on what COVID would mean and the impact on the industry,” said Jonathon Drummond, Chicago-based head of casualty broking, North America, at Willis Towers Watson PLC.

COVID-19 “didn’t pan out to that doomsday” as “it was not a major event for the industry,” Mr. Moitoso said.

As a result of workers comp market stability, insurers are now more interested than ever in “leveraging and packaging with other lines,” Ms. Cullen said. “Insurers are asking, how can we potentially leverage a comp program with a tough property placement?”

This has led to increased competition for business, Mr. Drummond said.

“Clients are changing carriers as a result of volatility in other lines of business” as “those clients are moving to a supported structure” within the casualty program, he said. 

Insurers are leaning on the “highly desirable line of business of workers comp to support a property program or umbrella program,” he said. “You have a lot of commercial insurers that have been profitable, and so they are actively pursuing these new accounts.”

“There’s a reason there is still a lot of interest in the business,” Mr. Moitoso said. “We are seeing more products packaged together with workers comp … as the carriers are demanding workers comp go along with it. That’s how much they want to cover it.”

Looking forward, regulatory changes could create concerns for the comp industry.

The future of communicable disease compensability in workers comp is one area to watch, Ms. Cullen said. “What’s the next thing? (COVID-19 compensability) opened our eyes to more things. If I get a flu at work, could that change? We’re wondering what other regulatory changes will have an impact.”

The rise in working from home during the pandemic and limited control over ergonomic standards could also lead to more claims. “Now you have more people working from home, leaning over,” Ms. Cullen said.