Posted on 17 Oct 2011
The workers' compensation insurance segment continued to face significant hurdles throughout 2010, and as a result, premium volume declined and underwriting results deteriorated, yet again, according to an A.M. Best Co. special report in the latest issue of BestWeek U.S./Canada.
While the line is still dealing with the same issues in 2011, there is some reason to be hopeful as premium growth is on track to be positive for the first time since 2005, according to the report. However, as the workers' comp system celebrates its centennial in 2011, conditions appear grim over the near term, and A.M. Best expects underwriting results to weaken further before they get better.
In BestWeek Europe, encouraged by a strong flow of foreign investment and by what it sees as signs of growing political stability, insurance broker Marsh Inc. launched an initiative to insure oil rigs in Iraq.
The Iraq Land Rig Facility, offered in partnership with Anglo Arab Insurance Brokers, will cover such risks as liability and physical loss and damage to the rigs while the equipment is in Iraq.
Also in BestWeek U.S./Canada, the California State Compensation Insurance Fund raised eyebrows recently when it said it would be laying off between 1,500 and 1,800 employees — roughly 25% of its overall headcount. But workers' compensation insurance experts said such cuts reflect changes at both the fund and in the broader workers' compensation market that made it necessary for the fund to scale back.
The layoffs, to go into effect in May or June, should save $150 million each year and will primarily affect clerical and technical employees. The fund will also be closing some of its 16 offices in the state in a move that would save the fund roughly $200 million annually, according to estimates provided by the fund.
Michelle Baurkot, assistant vice president at A.M. Best, said the layoffs and geographic shifts come as a result of changes in California's workers' compensation market in the wake of a major workers' compensation reform package that California enacted in 2003 and 2005. The reform package helped to cut workers' compensation rates by 58% between 2003 and 2006 and helped to reduce the state fund's share of the market.