"In the past three years, workers' compensation results have been more favorable than in any other period in the past half-century," said Jerry Theodorou, a VP, Insurance Research at Conning.
"The calendar-year combined ratio averaged 94 in 2015-2017, and profitability continued in 2018, with our combined ratio projection estimated to be below 90. However, the line has shown sluggish premium growth due to the combination of modest payroll growth and widespread rate decreases over the past three years."
The Conning study, "Workers' Compensation Insurance: As Good as it Gets", looks beyond the cycle to analyze external structural forces driving long-lasting change to workers' compensation insurance, including unfolding economic, technological, and societal trends that will fundamentally alter workplaces, transform the workforce, and change loss potential.
"Our near-term outlook for the workers' compensation line is for deteriorating results in the next three to five years amid continued rate reductions, flattening loss frequency, rising loss severity, and weakening loss reserve releases," said Steve Webersen, head of Insurance Research at Conning.
"While some of this will be cycle-driven, there are many external forces we analyzed that will drive long-lasting change to workers' compensation insurance, including labor shortages, new immigration patterns, an aging workforce, cutbacks in safety and job training, among others. Insurers will need to carefully consider the impact of these and other forces in their markets, both cyclical and structural, and develop strategies to respond."
The study is available for purchase at: www.conningresearch.com.