John Burton Reports That The Workers Compensation Insurance Industry Underwriting Results Continue to Improve in 2013

The current issue of the Workers’ Compensation Resources Research Report examines the profitability of the workers’ compensation insurance industry in 2013 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 93.7 in 2012 to 82.9 in 2013.. An operating ratio of less than 100 indicates that the workers’ compensation insurance industry is profitable, and thus the industry was profitable in 2013. The operating ratio of 82.9 in 2013 means the industry earned $17.10 of profits for every $100 of net premiums. Since 1993, the workers’ compensation insurance industry has been profitable in 17 of the 20 years – all but 2001, 2002, and 2011.

This issue provides for the first time information on profitability of the workers’ compensation insurance industry at the state level relying on data from the National Association of Insurance Commissioners. Of the eight states examined in the article, only two had underwriting profits (combined ratios were less than 100), but in six of these states, workers’ compensation carriers had profits after investment income was included.


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*John F. Burton, Jr. is Professor Emeritus in the School of Management and Labor Relations (SMLR) at Rutgers University and Professor Emeritus in the School of Industrial and Labor Relations at Cornell University. He is a Member of the Study Panel on National Data on Workers’ Compensation of the National Academy of Social Insurance (NASI). Burton previously served as Dean of SMLR and as a faculty member at Cornell University and the University of Chicago. He has a law degree and a Ph.D. in Economics from the University of Michigan.

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