Standard & Poor's Ratings Service warns that signs are pointing to more unprofitable years for the U.S. Workers' Compensation insurance market, and downgrades could be in the future if no improvement is shown.
In its ominously titled report released Jan. 23, “For the U.S. Property & Casualty Industry, Making Workers' Compensation Profitable May Be Mission Impossible,” S&P says high unemployment in the United States, a sluggish economic recovery, potential for higher inflation on future claims payments, adverse reserve developments and a volatile investment environment with historically low investment yields could add up to many years of unprofitability for the Workers' Comp industry.
S&P says the Workers' Comp segment has a “dismal track record of underwriting results,” and notes that the industry has only three years of underwriting profits in the past two decades: 1995, 1996 and 2006.
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