Here are some important highlights for brokers regarding premiums from the 2012 NCCI symposium:

Despite investment returns not generating sufficient operating returns, the premium growth is a positive sign of an improving economy and that the industry remains well capitalized for the years ahead.

Residual markets in the first quarter of 2012 saw a 47% premium growth. This is not positive, according to NCCI President Stephen Klingel, because the major growth was seen in the premium sector, exceeding $100,000 in premium. As residuals grow there is tendency that they become less self-sustaining, and it becomes difficult to maintain pricing differentials to meet the growht in risk inherent in a growing residual market.  

Another interesting and somewhat perplexing point is the fact that there has been a 3% increase in claim frequency despite the lagging economy. The logic has always been that claim frequency is tied to the employment rate.  In this economy with high unemployment, the question remains as to why claim frequency has gone up. 

NCCI states that premium growth was much higher in 2010 than originally projected due to the fact that when carriers collected their workers compensation audit premiums for the 2010 year, payrolls increased significantly. 

Net written premiums increased by 7.4% in 2011 compared to 2010, which is great news for brokers.

The combined ratio for private carriers in 2010 and 2011 was the same at 115, the highest since 2001.  Workers compensation combined ratio remains the highest of all major commercial insurance lines for the third straight year.  

The bottom line is that workers comp is on the upswing and will continue to thrive but brokers will start to find insurance carriers being more selective about the accounts they are willing to write.  Brokers must take action to lower their clients’ premiums and offer them a better underwriting profile to enter the more competitive marketplace with.