Worldwide: Workers’ Comp Insurance Rates On the Decline


By Jim Thompson

Sarasota, FL ( - Workers’ compensation insurance renewal rates in the United States — the premiums paid as existing policies are renewed — have been part of a worldwide decline in renewal rates across all lines of property, casualty and professional insurance products. 

The second quarter of this year, the latest full quarter for which figures are available, marked the 17th consecutive quarter of renewal rate declines across the world, according to the Global Insurance Market Index. The index is a proprietary measure of commercial insurance premium renewal rate changes from Marsh, an insurance industry consulting, brokerage and claims advocacy service company.

Currently, rate declines in workers’ comp insurance are showing that worker’s comp insurance is “a buyer’s market,” according to Dan Aronson, a managing director at Marsh and the company’s U.S. primary casualty placement leader.

“There’s a little bit of a feeding frenzy” among insurers in the workers’ comp business, Aronson said. Part of the reason for the interest in writing workers’ comp policies is that insurers have a significant amount of surplus capital — more than $700 billion — to invest in new business, he explained.

In addition, Aronson said, the “combined ratio” in the workers’ comp arena — losses and expenses divided by premiums — is at 94. A combined ratio above 100 means that an insurer is paying out more than it takes in, while a ratio below 100 puts a carrier in positive territory.

Currently, the combined ratio for auto insurance is at 110, so insurers are looking at workers’ comp as a means of balancing out their automotive business, according to Aronson.

“I think what you see is carriers trying to broaden their portfolio,” Aronson said.

Coming from another perspective: The National Council on Compensation Insurance (NCCI), the organization for most states in workers’ comp ratings and statistics, sees a more simple explanation for declining rates in workers’ comp insurance.

 “The primary reason for continuing declines in rates is declining frequency in claims,” said Dean Dimke, NCCI’s Marketing Communications Director via email to

Headquartered in Boca Raton, FL, NCCI was understaffed this week in the aftermath of Hurricane Irma, and was not able to provide detailed assessments of the current rate structure in the workers’ comp market.

Asked whether the declining renewal premium rates would have any effect on the number of insurance carriers in the workers’ comp market, Dimke’s noted that workers’ comp insurance is required by law across the United States, meaning that there will always be a market for the product.

Here’s a look at how the rate decreases in workers’ comp insurance have played out in some of the larger workers’ comp markets across the country:

According to an NCCI news release, “the proposed reduction represents a continued improvement in claim frequency, more than an 8 percent decrease in Florida over the last two years, and is the primary driver of the decrease” filed with the state’s Office of Insurance Regulation.

The NCCI recommendation comes less than a year after two Florida Supreme Court rulings prompted state regulators to boost premiums by 14.5 percent.

One of those rulings found that a mandatory fee schedule for workers’ comp claimants’ attorneys was unconstitutional, because it kept claimants from getting reasonable representation.

The second ruling found the state’s 104-week limit on temporary disability benefits to be unconstitutional, according to an Insurance Journal report.   

The veto earned praise from the Property Casualty Insurers Association of America (PCIAA), which issued a statement noting that the bill “would have injected Illinois into the insurance business.” The PCIAA statement went on to note that, given “the very competitive nature of the workers’ (sic) compensation market in the state, this legislation was unnecessary and would have placed a new burden on taxpayers.”

In a related development, Rauner also vetoed a measure in August that would have required insurance companies to obtain state approval to set rates for workers’ compensation insurance. 

That WCIRB’S proposed pure premium rate for Jan. 1 of next year is based on loss and payroll data submitted by all insurance companies doing business in California. The proposed rate is more than 7 percent below the average Jan. 1, 2017 advisory pure premium rate, according to the WCIRB. 

The board had attributed the recommended reduction in premium rates to cost savings measures from the state’s 2018 budget. Savings spearheaded by the New York State Workers’ Compensation Board also contributed to the reduction, according to the board.

Elsewhere around the country:

The proposed decrease is due to insurers having had fewer workers’ comp claims and paying less for these claims, the North Carolina Rate Bureau said in a letter.

Gov. Kim Reynolds credits a new state law, House File 518 — which prevents attorneys from taking fees connected with any workers’ compensation benefits being paid voluntarily by an employer, prohibits workers from collecting both workers’ compensation and unemployment benefits, and ends the requirement that employers prove that an intoxicated worker’s injuries resulted from intoxication — as a major factor in the premium reductions. Iowa’s insurance commissioner is currently reviewing the proposed rates. 

According to Aronson, the “buyer’s market” is likely to remain in place in the workers’ comp insurance arena.

“I think this is going to continue for the foreseeable future,” he said. 

As to where the bottom might be in terms of workers’ comp insurance rates, Aronson said premiums will vary from client to client. In some cases, the “buyer’s market” might mean a rate reduction, while in other cases, rates would remain flat, and some clients could see a slight hike in rates, he explained.

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