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Thursday, October 13, 2011

Dramatic Downturn In Work Comp Underwriting Will Continue Predicts AM Best

Due to the stressed housing market and ongoing economic downturn, 2010 was another difficult year for the title industry, according to an A.M. Best Special Report featured in this week's BestWeek U.S./Canada.

Despite the historically low mortgage interest-rate environment, revenues were pressured from the high unemployment rate and tightened credit standards. As such, operating results deteriorated and total industry written premiums declined slightly, year over year, A.M. Best said. Nevertheless, the title insurance industry managed to report an overall approximate 7% increase in surplus, driven mainly by the equity market recovery in 2010.

Also in BestWeek U.S./Canada, it's unlikely workers' compensation writers will see that line of business turn around anytime soon, despite large-scale workers' compensation reform bills enacted in several states this year, said Edward Keane, a senior financial analyst at A.M. Best.

Keane told BestWeek the deterioration that workers' compensation insurance has seen during the past two years will continue at least until mid-2012, unless the economy makes a dramatic improvement before then.

"I think the way things are going, results are going to get worse before they get better," Keane said, adding that for 2011, A.M. Best is projecting a 121.5 combined ratio. Last year, the combined ratio for the line was 118.1.

And with the election for Louisiana insurance commissioner coming up on Oct. 22, Jim Donelon, the Republican incumbent, and Donald Hodge, a Democrat, spoke to BestWeek about their opposing views.

Donelon has been spending aggressively to increase his name recognition and has continued his effort to court new insurers to the state. His opponent has gone on the attack, targeting Donelon for accepting campaign contributions from insurance companies doing business in the state. In fact, if Hodge had his way, he would be the last elected insurance commissioner in Louisiana.