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Workers compensation insurer combined ratios are expected to fall for the fourth straight year in 2015, while insurer premiums are expected to reach an all-time peak this year, according to the National Council on Compensation Insurance Inc.
Private workers comp insurers are expected to see a combined ratio of 96% for 2015, down from 98% in 2014 and a recent peak of 115% in 2010 and 2011, Boca Raton, Florida-based NCCI said Tuesday in its annual financial results update. This year's estimate is based on insurer data through the second quarter of 2015.
“NCCI's combined ratio estimate of (96%), if realized, would mean two consecutive years of underwriting gains for an industry that has posted combined ratios of less than (100%) in only two other years since 1990,” the report said.
Meanwhile, private workers comp insurer premiums are expected to reach $40.7 billion for 2015, up 5.7% from 2014, NCCI said. If this year's premium estimate is realized, it would mark the highest amount of private comp premiums recorded by NCCI in the last 25 years, according to data going back to 1990 from the ratings and research organization.
Combined ratios for the residual workers comp market were estimated to reach 105% in 2014, up from 103% in 2013, according to the NCCI's latest report. The decrease in assigned market profitability was attributed to a $27 million underwriting loss for the Massachusetts Workers' Compensation Assigned Risk Pool in 2014.
“Despite the 2014 increase, the recent combined ratios remain favorable, demonstrating the success of the industry's continued focus on self-funded residual markets,” the report reads.
Residual market premiums were estimated to reach $1.2 billion in 2014, up 9% from 2013, NCCI said.
The residual workers compensation market is “manageable and operating effectively,” with a market share of 6.8%, according to the National Council on Compensation Insurance Inc.