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Excess workers compensation market shifts.


A change in the underwriting of excess workers comp insurance has been underway over the past year and a half or so.

Historically, purchasing the stand-alone coverage has been “more of a commodity type of play,” according to Pamela Ferrandino, casualty practice leader for Willis North America.

While self-insured employers who buy excess workers comp insurance have sought stable relations with their insurers, they have also selected excess underwriters based on the lowest available price, she said.

But increasing workers comp claim loss severity and fewer insurers offering the stand-alone product have been changing that as have low interest rates. You can read more about those forces and how they are impacting the prices and attachment points insurers' now want to see for excess comp business here.

Another point not mentioned in that story, though, is that excess insurers are also spending more time closely underwriting each account, said Eric Silverstein, senior vp national accounts in Atlanta for Lockton Cos. L.L.C.

They are spending a lot more time profiling risks than they did in the past.

“So employers are generally going to see there is more to that process,” Mr. Silverstein said.

Employers, in turn, will have to spend more time selling their accounts. That means making sure policyholders are doing everything possible to mitigate losses by operating top-notch workers comp and safety programs.

In other words, we are at that point in the market cycle when risk management practices will pay off.

Luckily, we are not at that point in the market cycle where excess work comp insurance is impossible to obtain, several sources told me.

But renewals with 10% increases are common said said Duke Niedringhaus, an excess workers-comp specialist at broker J.W. Terrill in Chesterfield Mo. Excess insurers, however, will want much more than that for accounts with losses.