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For The U.S. Property/Casualty Industry, Making Workers' Compensation Profitable May Be Mission Impossible Jan 12
Standard & Poors, Jan 2012
Abstract
All signs are pointing to more unprofitable years ahead for the U.S. workers' compensation insurance industry, even as the rates are improving in certain states. Continued high unemployment in the U.S., a sluggish economic recovery, potential for higher inflation on future claims payments, adverse reserve developments, and a volatile investment environment with historic low investment yields could add up to many years of unprofitability for the workers' compensation industry. This industry has a dismal track record of underwriting results as illustrated by only three years of underwriting profits over the past two decades (1991-2010). Between 1991 and 2010, the workers' compensation industry statutory combined ratio was below 100% in 1995, 1996, and 2006 (see chart 1). The combined ratio is...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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