McLean and Brach said that while industry results have improved, rates have declined every quarter since the start of 2015.
McLean also said that ongoing improvement in economic conditions and technological advancements are benefiting performance over the near term.
Brach highlighted the challenges that remain in the workers’ compensation line and A.M. Best’s view of the line.
“Despite solid industry results in 2015, the workers’ compensation line is likely to remain challenged relative to other commercial lines,” said Brach. “The primary reasons for this are rate softening, the low investment yield environment and the potential for adverse loss reserve development.”
Brach also said that in A.M. Best’s opinion, “carriers that maintain strong risk-adjusted capitalization, adequate pricing and conservative reserve practices will likely build on their success as market conditions become more challenging.”
The entire Best Special Report, titled, “U.S. Workers’ Compensation Delivers Underwriting Profit Despite Rate Deterioration,” can be viewed at http://www3.ambest.com/bestweek/purchase.asp?record_code=254513.
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