S&P Reports WC Rates Declining
According to an article published by Standard & Poor's Ratings Services, the ratings on workers' compensation insurers could face negative pressure in the latter part of 2008 and in 2009, as workers' compensation rates have been declining, significantly reducing the margins of insurers that write this business.
In a report, the agency added that so far these declining prices have not led to weak insurer performance because state reforms have contained loss costs and led to better earnings. "But such measures can only forestall the inevitable for so long," S&P cautioned.
It noted that workers' compensation insurance is highly regulated, and regulations are different in every state, which alone would make this a very challenging business to be in. Meanwhile players must also contend with the long-tailed nature of claims, persistently high medical cost inflation, and the possibly disruptive effect of periodic reforms and state-run funds, S&P said.
Published on March 14, 2008
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