Conning Research and Consulting says in its “Workers’ Compensation: A Bumpy Road from Recession to Recovery” that with the current investment environment working against workers’ compensation insurers, companies may be pressured into a harder market as they try to achieve underwriting profits in a line that has not had a combined ratio under 100 since 2006.

One point that I would like to stress in the article is that "New York is still suffering from rate inadequacies despite approving a 9.1 percent increase in October 2011 and a 7.7 percent increase the year before."  If this is true that assessments and rates are inadequate in New York and will continue to need to be increased, I think that New York will become the first hard market. As I mentioned in a previous blog entitled "Workers’ Compensation Assessments In New York Are Highest In Nation," the biggest problem as the market hardens in New York is the State Insurance Fund's continued advantage of being able to charge lower surcharges over private carriers.

In addition to all this, brokers and carriers need to keep in mind that come 2013, New York and NCCI have both adopted a higher experience modification split point, which will continue to rise over several years and will also include an inflation factor. Therefore, employers with poor experience will see their experience mods worsen drastically.  So you have a hard market, plus worse experience mods, which equals big increase in premiums, even though payroll is nowhere back to where it used to be. This means clients that do not normally shop around will start shopping their insurance to various brokers, trying to keep their head above water and stay in business. A broker can cement his or her relationship with clients as long as the client sees that the broker is going above and beyond to keep the client afloat amid increasing insurance rates.

Offer value-added services and you will maintain current clients and win new business.

See full article from PropertyCasualty360 here.