July 23, 2007
| Contact: | Anne Steinberg Kitchen Public Relations, LLC 212-687-8999 anne@kitchenpr.com |
Conning Research: Profit Recovery in Workers' Compensation Insurance Driven by Price Increases, Frequency Decreases, and Law Changes
-- Will recovery be short-lived?
-- Total losses growing in spite of frequency decreases
Hartford, CT, July 23, 2007 - Strong pricing and benefits from state workers' compensation law reforms have masked an increase in workers' compensation accident-year losses that could curtail the recovery now that the market is softening, according to a new study by Conning Research and Consulting. Insurers who address the root causes of severity growth can protect their profitability.
"The workers' compensation line of insurance has seen a steady decrease in frequency over the past ten years, but total incurred losses are climbing and continue to be driven by severity," said Mark Jablonowski, analyst at Conning Research & Consulting. "While a focus on severity factors-such as the cost of medical services, utilization rates, back-to-work, state-specific strategies, and claims management-can help to control the overall severity of loss, the 'missing link' may be attention to injury prevention."
The Conning Research study, "Workers' Compensation: Getting a Handle on Severity" identifies the components of loss severity and explores how insurers can begin to control for severity.
"Our chief concern is the increase in loss severity in the face of a softening market. This study analyzes the components of severity growth, and finds the largest driver of severity remains medical costs, which in workers' compensation are growing at more than twice the rate of the medical consumer price index. But, there are also more fundamental drivers of severity inherent in the root causes of claims," said Stephan Christiansen, director of research at Conning. "By addressing these components of severity, insurers can target their efforts toward improving overall cost trends in workers' compensation. This can help them avoid the potential soft market price squeeze that can rapidly reverse recent gains, and allow insurers to maintain profitability."
"Workers' Compensation: Getting a Handle on Severity" is available for purchase from Conning Research & Consulting by calling (888) 707-1177 or by visiting the company's web site at www.conningresearch.com.
About Conning Research & Consulting, Inc.
Conning provides insurance industry analysis to insurers and industry stakeholders. The Conning name has represented excellence in independent insurance industry research for 50 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth insights and analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.
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