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Market Forecast CloudyFor Workers’ Comp Insurers

Tracking the state of the workers compensation market, the National Council on Compensation Insurance finds that the business is in a cautionary period and facing an overcast outlook.

In a departure from most of the 1990s, NCCIs preliminary year-end analysis for 2000 shows that net written workers’ comp premium for private carriers is up for the first time since 1993. In fact, total premium was at $25.5 billion at year-end, compared to $22.2 billion for year-end 1999.

It is interesting to break down this 15 percent increase, which is in sharp contrast to the 3 percent annual drop in premium over the previous two years. Wage inflation (4 percent) and exposure growth (3 percent) changed similarly to those of prior years, thus not really explaining the increase. Instead, a change in reinsurance usage patterns, price changes, and “premium leakage” (a combined 7 percent gain) were the key drivers of this growth.

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