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Member, Beacon International Group, Ltd.
BOCA RATON, Fla.—The workers compensation insurance market is “deteriorating,” NCCI Holdings Inc. announced Thursday.
Insurers’ calendar-year combined ratio hit 115% in 2010, up 5 percentage points from a year earlier, according to the Boca Raton, Fla.-based rating and research entity’s annual State of the Line report.
However, 3 points of the 5-point increase in combined ratio that occurred from 2009 to 2010 was due to one insurer adding more than $800 million to excess workers compensation reserves. NCCI did not name the insurer.
“In 2010, NCCI defined the state of the workers compensation industry as ‘precarious’ based on considerable uncertainty about where the market was headed,” said NCCI President and CEO Steve Klingel. “Unfortunately, that uncertainty has, to a large extent, been resolved—and not in a positive direction. We have continued to witness ongoing deterioration in market fundamentals. Today, the workers compensation industry faces a number of difficulties that will confront market stakeholders in the weeks and months to come.”
Various challenges
Challenges insurers face include policy prices that continue to drift downward, deterioration of reserves, and an increase in claims frequency.
NCCI has reported that a “precarious market outlook prevails.”
NCCI’s annual State of the Line report is available at www.ncci.com.