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Workers comp pricing to improve throughout 2013: Fitch

Workers comp pricing to improve throughout 2013: Fitch

With little sign that rising workers compensation pricing trends will reverse in the near term, insurer results will continue to improve during the remainder of 2013, according to Fitch Ratings Inc.

An improvement in pricing for workers comp insurers over two consecutive years comes after “a long period of declining premium rates,” the ratings company said.

“Workers compensation has been the worst-performing major commercial lines segment for some time,” New York- and London-based Fitch said in a statement released Friday. “However, the 2012 industry aggregate segment combined ratio improved to 110% from 117% in the prior year. Fitch projects a 105% workers compensation calendar year combined ratio in 2013.”

Workers comp represents the largest U.S. commercial lines segment, accounting for 18% of the property/casualty industry's commercial lines net written premiums, according to Fitch.

“Given the prominence of workers compensation as a percentage of many insurers' books of business, continued market hardening and underwriting improvements promote earnings stability that is viewed favorably from a credit perspective,” Fitch said.

But Fitch also said that insurers' loss reserves for workers comp line remain inadequate.

Workers comp loss reserves have deteriorated over the past four consecutive years, Fitch said.