The workers’ comp industry hasn’t had a profitable underwriting year since 2006, according to Conning Research & Consulting. And while the economic recovery and rate increases will boost premiums, Conning expects—just as in recent years—rising medical costs and the increased utilization of drugs to re-introduce the threat of inflation in loss costs and reduce profitability even further.
The firm’s recent report, “Workers’ Compensation: A Bumpy Road from Recession to Recovery,” indicates that the line has been affected by falling investment yields, creating headwinds against overall profitability. “Still, some early signs of a turn in key economic drivers may be appearing, and the effects of recovery may bring some new surprises in risks and opportunities in the line,” said Joshua Youdovin, analyst at Conning Research & Consulting.
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