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Comp industry strong but underwriting likely to decline: Fitch

workers comp

The workers compensation market is likely to remain strong despite the economic challenges of the pandemic, but underwriting performance is likely to decline in 2021 and continue to fall, according to a report released Friday by Fitch Ratings.

Net written premium in the workers compensation industry in the past five years has mainly held steady, ending 2019 at $47 billion, the report said. Combined ratio averaged 91% during that period.

Direct written premiums declined nearly 10% in the first half of this year amid the pandemic. Claims frequency has dropped significantly, with California reporting second-quarter frequency declines of 10% in indemnity and 33% in medical-only claims.

Unlike other commercial lines, workers comp has not experienced substantial premium rate increases, and Fitch predicts that direct written premium volume will continue to decline in the near term due to reduced employer payrolls and negative premium audit results.

The comp industry will continue to see negative premium rate pressure, according to the study, as well as the long-term effects stemming from changed risk exposures and costs due to an uptick in telemedicine, more employees working from home and a reduction in employee travel.

More insurance and workers compensation news on the coronavirus crisis here.