Following a profitable year for the industry, the p&c insurance market will be stable and competitive in 2014, according to "Wells Fargo Insurance 2014 Insurance Market Outlook," which was released on Jan. 30. The report, issued by Wells Fargo Insurance, covers a range of product segments, from workers' compensation and employment practices, to property and technology and network security.
"We expect 2014 to be a good year for the majority of our commercial property and casualty insurance customers," says Simon Hodge, head of the Professional Risk Group at Wells Fargo Insurance. "We anticipate significant marketplace capacity, excellent coverage quality in many areas, and do not expect a lot of pricing volatility."
The experts at Wells Fargo Insurance explored what the year might hold for the workers' compensation industry specifically. In the report, they forecast continued rate increases for the first three quarters of 2014, along with continued reduction in the combined loss ratio, resulting from higher prices seen over the past three years.
Other predictions for the workers' comp industry include:
- Expected moderation in rate increases in Q4 resulting in flat to 5-percent increases.
- Moderate reserve releases will further increase profitability.
- Continued movement away from guaranteed cost program structures into higher deductible program structures, either because they are a more appealing alternative or a necessity.
- If TRIPRA is allowed to expire, then insureds with a higher number of employees in urban areas and select insureds with high exposures in rural areas will experience higher-than-average rate increases.
- Insureds with guaranteed-cost program structures or poor loss experience will see 10- to 20-percent increases, with higher increases in problematic states, such as California and New York and urban areas.
- Insureds with low deductibles will see 5- to 15-percent increases.
- Insureds with high deductibles will see zero to 5-percent increases
- The continued use of predictive modeling analysis to improve risk selection, proper retention levels, and pricing will result in more conservative underwriting by the insurers.
For findings related to other arenas, such as risk management and overall market capacity and pricing, access the full report.
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