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(c) 2016 Jon L Gelman, All Rights Reserved.

Tuesday, November 19, 2013

John Burton Reports on Workers' Compensation Insurance Industry Underwriting Results

 Issue 7 of the Workers’ Compensation Resources Research Report examines the profitability of the workers’ compensation insurance industry in 2012 as reported by A.M. Best. The operating ratio, which is the most comprehensive measure of underwriting results because it considers investment income, decreased from 100.4 in 2011 to 93.8 in 2012.  An operating ratio of greater than 100 indicates that the industry is not profitable, and thus the industry was unprofitable in 2011.  An operating ratio of less than 100 indicates that the workers’ compensation insurance industry is profitable, and thus the industry was profitable in 2012.  The operating ratio of 93.8 in 2012 means the industry earned $6.20 of profits for every $100 of net premiums.

The operating ratio has usually been less than 100 in recent decades, indicating that the workers’ compensation insurance industry has generally been profitable when investment income earned by insurance carriers is considered.  Since 1993, the insurance industry has been profitable in 16 of the 19 years – all but 2001, 2002, and 2011.

An order form for Issue 7 of the WCRRR can be downloaded from www.workerscompresources.com