Excess Capacity To Impact Workers' Comp Outlook
A recurring theme in workers' comp for atleast the last three years is the recognition that the market has agreat deal of excess capacity.
Most analysts estimate excess capacity to be somewhere in theneighborhood of $50 billion-to-$100 billion. If you take out $20billion for reserve deficiencies, youre left with approximately $30billion-to-$80 billion in surplus.
A.M. Best in Oldwick, N.J., has also forecast that aboutone-third of p-c companies will fail or be consolidated by the endof 2003. Interestingly, the bottom quarter of providers representsome $70 billion in surplus–meaning that this group representsroughly the same amount of excess capacity that exists in themarket.
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