Liberty Mutual, Travelers and The Hartford claim the top three spots for U.S. market share in workers’ compensation, as the sector’s combined ratio is holding on at 108.5 percent for 2013, which would be the first year since 2008 that the combined ratio was below 110 percent, according to new figures released by A.M. Best.
“The improved combined ratio reflects the increased premium during the year as incurred losses, underwriting expenses and dividends all were up on an absolute basis,” according to the report. “Premiums grew faster than the various categories of expenses, which resulted in improving loss and combined ratios for the second straight year. The last time the combined ratio for workers’ comp declined for two consecutive years was 2005 and 2006, when the combined ratio fell to 98.5 in 2006.”
Workers’ comp’s combined ratio bottomed out in 2010 at 118.1 percent after several years of sharp declines. Rebounding slightly in 2011 to 117.8 percent, the industry firmly recovered in 2012 by dropping seven points, and now looks poised to continue its improvement in 2013.
Similarly, in 2010, after hitting its lowest point since 2000, workers’ comp net premiums written are projected to grow for the third straight year in 2013, reaching nearly $45 billion. The last time consecutive years of growth were seen was before 2005, when premiums topped out near $50 billion after five years of growth. Net income for the A.M. Best workers’ comp composite increased from $0.6 billion to $1.5 billion in 2012, which is a 67 percent increase.
Despite these positive signs, A.M. predicts workers’ comp to remain one of the commercial sectors’ most difficult lines to underwrite.
The 25 largest workers’ comp insurers saw net premiums written increased at a slightly slower pace than the overall industry. The five largest carriers grew at an even slower rate of 5.4 percent, according to A.M. Best. While most workers’ comp insurers reported increases in premiums for 2012, Berkshire Hathaway reported the largest increase among the top 25 carriers at 94.2 percent (due in part to the acquisition of Guard Insurance Group), compared with 27 percent growth in 2011. Nationwide and Employers Insurance Group reported 56.6-percent and 38.9-percent increases, respectively, in premiums during 2012, placing them second and third behind Berkshire.
American International Group’s 13.4-percent decrease in net premiums written ranked as the largest percentage decrease among the top 25 carriers, followed by CNA with a 12.1-percent reduction and the State Compensation Insurance Fund of California (SCIF), which reported a 10.8-percent decline in premiums. This followed an 11.2-percent decrease in 2011 for SCIF, which has reported reductions in premiums every year since 2005.
After reaching a nearly 10-percent market share in 2011, Liberty Mutual lost a little bit of ground, but retained its spot on top of the sector, with $3.83 billion in net premiums written.
The top five workers’ comp insurers (Liberty Mutual, Travelers, The Hartford, AIG and the State Insurance Fund of New York) retain 36.6 percent of the market.
The full list of the top 25 workers’ comp insurers, based on net premiums written and market share:
- Liberty Mutual ($3.83B; 9.3 percent)
- Travelers ($3.44B; 8.4 percent)
- The Hartford ($2.99B; 7.3 percent)
- AIG ($2.82B; 6.9 percent)
- State Insurance Fund of New York ($1.94B; 4.7 percent)
- Berkshire Hathaway ($1.04B; 2.5 percent)
- Chubb Group ($961M; 2.3 percent)
- Zurich Financial Services ($951M; 2.3 percent)
- Texas Mutual Insurance ($927M; 2.3 percent)
- State Compensation Insurance Fund of CA ($888M; 2.2 percent)
- Fairfax Financial Group ($833M; 2.0 percent)
- CNA ($824M; 2.0 percent)
- W.R. Berkley Group ($805M; 2.0 percent)
- Old Republic ($759M; 1.9 percent)
- Accident Fund Group ($644M; 1.6 percent)
- Employers Insurance Group ($570M; 1.4 percent)
- ACE INA Group ($557M; 1.4 percent)
- NJM Insurance Group ($441M; 1.1 percent)
- Pinnacol Assurance ($431M; 1.1 percent)
- SAIF Corp. ($416M; 1.0 percent)
- Farmers Insurance Group ($397M; 1.0 percent)
- Nationwide Group ($370M; 0.9 percent)
- Great American P&C Insurance Group ($356M; 0.9 percent)
- Auto-Owners Insurance Group ($345M; 0.8 percent)
- Meadowbrook Insurance Group ($345M; 0.8 percent)
The top 10 states the most workers’ comp direct premiums written in 2012:
- California ($9.00B; 18.8 percent)
- New York ($4.75B; 9.9 percent)
- Illinois ($2.60B; 5.4 percent)
- Pennsylvania ($2.53B; 5.3 percent)
- Texas ($2.45B; 5.1 percent)
- Florida ($2.01B; 4.2 percent)
- New Jersey ($1.93B; 4.0 percent)
- Wisconsin ($1.73B; 3.6 percent)
- North Carolina ($1.24B; 2.6 percent)
- Georgia ($1.13B; 2.4 percent)
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