Workers’ comp grows
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Larger insurance companies have begun writing more workers’ compensation coverage in Louisiana, a move that may help businesses lower their costs, insurance industry members say.
While few new insurers are entering the market, some national firms that had written little new business are competing for customers, said Barry Blumberg, president and chief executive officer of Blumberg and Associates Inc.
“In the last six months we have written more business with The Travelers, Zurich and CNA than we’ve written with them in the two prior years,” Blumberg said.
Blumberg said he doesn’t know why the insurers are writing more workers’ compensation coverage.
It may be that insurers are reducing their property/casualty exposure in Louisiana and are aware that workers’ comp is profitable, Blumberg said.
Jeff Mohr, owner of Lewis Mohr Real Estate and Insurance Agency LLC, said Louisiana’s success in reforming the laws governing workers’ compensation has made a big difference.
“Right now it’s a profitable bit of business, so companies are getting aggressive,” Mohr said.
Earlier this year, the National Council on Compensation Insurance lowered its estimate of the cost to pay for and handle workers’ comp claims in Louisiana by 17.4 percent for 2009. In the past three years, those costs have fallen by more than 40 percent.
While other factors affect the amount a business pays for workers’ compensation, such as the frequency and size of past claims, NCCI officials expect the savings to be significant.
Already more than a dozen insurers have asked for or received state Insurance Department permission to lower their rates.
The Zurich group of companies, the third-largest workers’ comp company in the United States, is seeking a 15 percent reduction in rates for its 894 customers, Insurance Department records show. The AIG companies, also among the nation’s largest writers of workers’ comp, reduced rates by 18.3 percent for their 2,593 customers.
National American Insurance Co. plans to cut its rates by 59.2 percent as of May 1, although the company had only eight customers at the time of its rate filing.
The companies either declined to discuss their rate filings or could not be reached for comment.
Insurance Commissioner Jim Donelon said he would not be surprised to see the national companies cut prices to gain market share, a strategy that occurs frequently in soft markets.
Workers Compensation Research Institute executive director Richard A. Victor said the increased competition is not surprising.
With premiums falling because of lower employment and wage levels, insurers are looking for opportunities to grow their revenue, Victor said.
According to a report by Harry Shuford, chief economist for the National Council on Compensation Insurance, the workers’ compensation business suffers less during a recession than other lines of insurance.
In five of the last six recessions, workplace injury rates fell, the report says. This is probably because employers lay off their least experienced workers, who are also the most likely to be injured.
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