OLDWICK, N.J.--(BUSINESS WIRE)--The U.S. workers’ compensation segment marked its third consecutive year of underwriting improvement, according to A.M. Best’s annual special report on this key commercial lines segment. A sustained positive rate environment has helped underwriting performance, but familiar challenges from competitive market conditions and persistent low investment yields continue to compress margins, according to this report featured in the latest edition of Best’s Journal, a biweekly publication that presents A.M. Best’s original research, analysis and commentary on the global insurance industry. Improvement in the workers’ compensation segment’s combined ratio has continued, and a reduction in claims frequency has largely offset the increase in claims severity.
Other highlights in this issue of Best’s Journal include as follows:
- U.S. Private Passenger Nonstandard Auto Market Experiences Pressure: Small, regional and single-state writers of private passenger nonstandard auto policies have seen their operating performance deteriorate over the past decade and are struggling to maintain market share. Increased competition from large standard auto writers, economic conditions, limited scale, rising loss severity trends and fraud all have played a role in this downturn, which isn’t likely to subside in the near future.
- Location is a Crucial Factor for U.S. Health Insurers’ Growth from Medicaid Expansion: Medicaid has been a material source of growth for the health insurance industry in recent years and will continue to help the segment develop, especially given the recent expansion of the program by many states. The economic downturn and high unemployment drove natural growth for health insurers that operate in the Medicaid industry. More recently, their growth is being driven by factors related to the Affordable Care Act (ACA) and expansion of Medicaid income-eligibility requirements.
- Solvency II Progresses, but Significant Challenges In Store for Europe’s Insurers: While most stakeholders initially welcomed the Solvency II project, a more mixed reaction has developed for an insurance regulatory framework that promises to be risk-based, promote market efficiency and harmonize regulation. Since regulatory solvency calculations do not directly affect underlying solvency, A.M. Best does not expect Solvency II to have an automatic effect on ratings of European insurers.
- Recent noteworthy Best’s Credit Rating Actions, rating rationales and more.
Best’s Journal is available exclusively as part of a subscription to the Best’s Insurance News & Analysis service, and is delivered every two weeks as a bound, printed publication and in digital format via the Best’s Insurance News & Analysis website. Each issue is an installment in a cumulative business resource that provides insight from A.M. Best’s perspective as a credit rating agency, data provider and news publisher with a unique focus on the insurance industry.
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