As the wider property/casualty sector has begun to rebuild along with the slowly recovering U.S. economy, workers’ comp hasn’t. It had strong years going into 2005 and 2006, according to the A.M. Best special report, “U.S. Workers’ Compensation — 2009 Market Review,” but the past three years have seen a steady decline in premiums, affecting all 50 states.
According to A.M. Best Co., the nation's workers' compensation insurance industry's underwriting performance has continued to weaken as the composite combined ratio deteriorated 8.8 percentage points to 120.0 in 2009, representing the highest combined ratio posted by the composite since it recorded a 118.6 in 2002.
The calendar year composite combined ratio of 111.2 in 2009 was up nearly seven percentage points from 104.6 posted in 2008.
A.M. Best says the deterioration is being driven primarily by the downward spiral in premium volume as the economy continues to take its toll on exposure levels and competitive pricing remains widespread. The composite's net income plunged 61 percent to $0.3 billion in 2009, representing the fourth consecutive year of deteriorating operating results.
Workers' compensation composite's net premiums written (NPW) plunged 14.6 percent to $12.3 billion in 2009, its lowest level since 1999. The composite's top line has fallen for five straight years, decreasing approximately 41 percent since reaching 4s high of $21.0 billion in 2004. Workers' compensation new written premium fell for the fourth consecutive year in 2009, declining 11.6 percent to $36.2 billion from $41.0 billion in 2008.