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Member, Beacon International Group, Ltd.
NCCI Holding Inc.'s recently released “2011 Workers Compensation Issues Report” doesn't paint a picture of a robust comp insurance market or strong premium growth in the year ahead.
The issues report is actually a series of articles available here.
In one article titled “Precarious Market Outlook Prevails,” NCCI President and CEO Stephen J. Klingel, writes that much remains the same as last year when NCCI defined the state of the comp market as precarious because of the deep economic recession and regulatory changes.
There is currently little reason for NCCI to change its opinion that the market remains precarious, at least in the near term, Mr. Klingel writes in this year's report.
“Significant challenges” the line faces include poor insurer results, rising medical costs, low investment returns, erosion of state reforms, and moderate claims severity increases.
In another article titled “Will There Be a Recovery in Workers Compensation in 2011?” NCCI Chief Economist Harry Shuford writes that “from an underwriting perspective, workers compensation is unlikely to experience a material rebound as the broader economy continues to recover from the Great Recession.”
Premium growth will be sluggish at best, Mr. Shuford writes.
On the positive side, however, employment and payrolls stabilized in 2010 with some expansion in manufacturing, which produces high premiums. Also, smaller companies are expected to expand, which add a bigger boost to premiums than large firms.