OLDWICK, N.J.--(BUSINESS WIRE)--In this A.M.BestTV episode, A.M. Best’s Gordon McLean, senior financial analyst, and Connor Brach, associate analyst, said the U.S. workers’ compensation insurance sector posted a combined ratio of 96.0 in 2015, the fifth year in a row of underwriting profits. Click on http://www.ambest.com/v.asp?v=workerscomp1016 to view the entire program.
McLean and Brach said that while industry results have improved, rates have declined every quarter since the start of 2015.
“In 2015, A.M. Best anticipated that additional improvement would occur in operating performance, despite the impact of rate reductions in the first quarter of 2015 into 2016,” said McLean. “However, the strength of the improvement in 2015 is very encouraging and it drives cautious optimism that results will remain profitable, at least over the near term.”
McLean also said that ongoing improvement in economic conditions and technological advancements are benefiting performance over the near term.
Brach highlighted the challenges that remain in the workers’ compensation line and A.M. Best’s view of the line.
“Despite solid industry results in 2015, the workers’ compensation line is likely to remain challenged relative to other commercial lines,” said Brach. “The primary reasons for this are rate softening, the low investment yield environment and the potential for adverse loss reserve development.”
Brach also said that in A.M. Best’s opinion, “carriers that maintain strong risk-adjusted capitalization, adequate pricing and conservative reserve practices will likely build on their success as market conditions become more challenging.”
The entire Best Special Report, titled, “U.S. Workers’ Compensation Delivers Underwriting Profit Despite Rate Deterioration,” can be viewed at http://www3.ambest.com/bestweek/purchase.asp?record_code=254513.
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