The workers’ comp market has been the most reliably lucrative part of the U.S. commercial insurance landscape over the last five years. More specifically, the market has a 91 percent average combined ratio from 2015-2019. Loss reserves have also shown unusual strength with favorable prior-year development of 15 percent of the earned premium year.
This sign of strength is just one reason why analysts are pointing to a bullish 2021 market. But read on for more predictions of what the workers’ compensation market is expected to look like in the coming year.
Profits
According to Fitch Ratings, the workers’ compensation market is likely to report stable profitability in 2020 despite the ongoing economic challenges brought on by the coronavirus pandemic. This is due to lower claims frequency that is currently outpacing pandemic-related losses.
But while this may sound like good news, Fitch analysts warn that underwriting performance in 2021 and beyond will likely weaken as claims activity stabilizes. Increased business activity and premium revenues continue to drop amid recent underwriting exposure reductions.
COVID-19
The industry has not seen the expected high number of COVID-19 claims, even with laws in more than a dozen states that assume that certain worker classes who contract the virus got it while working. This would make it easier for those workers to obtain workers’ compensation benefits.
However, uncertainty remains regarding longer-term health issues for more severe cases, including the potential for significant organ damage and failure and other chronic conditions that would increase workers’ compensation costs.
COVID-related cases represent nearly eight percent of year-to-date claims, and most settle for less than $10,000, according to a report from the Florida Division of Workers’ Compensation.
Economy & Technology
According to Fitch’s report, the strength of the economic recovery will also influence claims frequency levels moving forward. However, some of the wide-ranging economic shifts in response to the COVID-19 pandemic may have longer-term effects on risk exposures in workers’ compensation as well as claims costs.
Analysts also point out that greater use of telemedicine in case management, reduced employee travel activity, and more work from home arrangements will affect workers’ compensation claims’ severity and frequency.
The use of telemedicine, for instance, may be in its early stages within the workers’ compensation system, but there has already been a crossing of employers and workers’ compensation insurers embracing the option to provide remote medical care to injured or sick workers using the video technology.
The use of telehealth in workers’ compensation has many built-in advantages. It eliminates geographic barriers and is available in both urban and rural settings. Injured or sick employees can receive treatment at the workplace or allow for an immediate return to work if possible.
About InsureMyWorkComp & Their Workers Comp Solutions
InsureMyWorkComp is a digital brokerage that helps clients find the right workers’ compensation solution for their business needs, such as occupational accident insurance. Unlike other online platforms, we will help you to work with an agent who can provide you the right solution for your risk profile. Our staff has over 50 years of workers’ compensation underwriting and sales experience, and we are confident that we will provide you the support that you need. For more information or to get a quote, contact us today at (855) 340-9138.