The Best’s Special Report titled, “State Funds’ Net Premiums Written Increased for Fifth Consecutive Year In 2015,” cited rate declines in the first quarter of 2015 that have persisted through the second quarter of 2016, in tandem with the more competitive environment in property/casualty commercial lines in general.
This conclusion was drawn as part of A.M. Best’s annual report on the state workers’ compensation funds sector. Net premiums written (NPW) within this segment increased for the fifth consecutive year in 2015, growing 2.4% to
Although underwriting leverage measures for the competitive state funds composite are at low levels and indicate solid capitalization, the report cites concerns going forward such as the recent declining trend in workers’ compensation pricing, the prolonged low interest rate environment, the potential for less favorable reserve development and the uncertainties relating to potential workers’ compensation legislation and health care reform.
State funds mainly compete for workers’ compensation business while also serving as their respective state’s guaranteed market. Some businesses that find it more difficult to afford or secure coverage in the voluntary market during hard market conditions often turn to state funds. This was likely a contributing factor to the growth of state funds over the past several years.
Collectively, state funds’ NPW equated to 18% of the total
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=253600.
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Senior Financial Analyst
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