Posted on 01 Jul 2009
Citing the strain of escalating medical costs on the workers' compensation system, increasingly intense price competition, and the uncertainty over the sustainability of the 2003-2004 legislative reforms due to recent Court decisions, Employers Direct Insurance Company is commencing several strategic initiatives to reposition itself in the volatile California workers' compensation insurance marketplace.
“The current rapidly changing environment is a reminder of the volatility that saw a catastrophic upheaval in the marketplace just a decade ago,” noted Employers Direct CEO James Little. “There will always be pressure to cut rates, even after five years of sharp reductions. If the market continues to react viscerally to this demand – even as costs increase and investment income plummets – we will be well on the way to another crisis.”
Little also noted, “We pride ourselves on being on the leading edge of developments in this marketplace. We showed that when we entered the market in 2003 amid a scarcity of industry capacity. Today, we must be equally as bold in acknowledging that premium-writing capacity at today’s unprofitable levels no longer serves the best interests of workers compensation stakeholders – neither businesses nor insurers.
Because of these market conditions, Employers Direct will cease soliciting new and renewal California business on a direct basis effective August 1, 2009. Employers Direct is setting its rates at levels it sees as commensurate with the much higher risk profile of California workers’ comp claims. To reflect its reduction in premiums, Employers Direct is also announcing a reduction in staff of approximately 18%. It is anticipated that Employers Direct’s rating with A.M. Best will be affected by these actions.
Employers Direct will continue to provide the quality of service to its current and past policyholders that is the hallmark of its business.
Employers Direct Insurance Company is also currently licensed in Arizona, Colorado, Idaho, Illinois, Nevada, Oregon, and Utah.