Brokers: Workers' comp leads rate hardening trend

"Workers' compensation toughened as carriers raised prices or rejected the business," said the Council of Insurance Agents and Brokers. Based on a market survey for the first quarter of 2012, workers' comp rates were up 7.4 percent -- more than any of the other commercial property/casualty insurance lines.

The survey questioned brokers about rates changes for the first three months of 2012. It showed an average increase in workers' comp rates for the fourth consecutive quarter.

"Sixty-eight percent of brokers responding said workers' compensation prices increased 1 percent to 10 percent in the first quarter of the year," according to the CIAB's report. "A broker in the Southeast commented, 'workers' compensation was up with any kind of losses or up just a little even with no losses. Certain classes were not being accepted like they were.'"

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Prior to this quarter's rate increase, workers' comp rates had increased an average 7.5 percent in fourth quarter 2011, 4.1 percent in third quarter 2011, and 2.6 percent in second quarter 2011. In the first quarter of 2011, workers' comp rates dropped an average of 1.6 percent, according to the CIAB's survey.

In response to the question, how much have premium rates changed over the last three months, the majority said for workers' comp it was an increase of between 1 and 10 percent. The overall responses were:

Down 10 to 20 percent -- 2 percent.
Down 1 to 10 percent -- 1 percent.
No change -- 8 percent.
Up 1 to 10 percent -- 47 percent.
Up 10 to 20 percent -- 35 percent.
Up 20 to 30 percent -- 1 percent.

Pricing for the commercial property/casualty market as a whole rose 4.4 percent for first quarter 2012 compared to 2.7 percent in the previous quarter.

"We've been cautious up to now about declaring a market turn, but I think it's reasonable to say that the market has made a hard turn after two quarters of price increases and tighter underwriting," said Ken A. Crerar, president/CEO of the CIAB. "It's difficult to predict length and severity, but the market has turned."

Read more at the WorkersComp Forum homepage.

June 11, 2012

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