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 Soft market conditions with unabated price competition and a slow economy with reduced payrolls continued to affect Commercial Insurance including the Workers Compensation industry in 2010, as they did in 2009.
Robert Hartwig, president of the Insurance Information Institute, believes the Property/Casualty insurance industry will see growth in 2011 - the first time since 2006. Increase in demand for Commercial insurance is in its earliest stages and will accelerate in 2011, he said, although there will likely be regional differences across the country. Workers' compensation should be one of the growth areas.
Insurers found themselves under growing pressure from two forces - low interest rates that could dampen investment income in coming years and competition that has made raising prices difficult. Analysts will be watching closely to see how insurers handle both challenges.
The industry found itself under increased pressure in 2010 to help return injured employees back to work while effectively managing costs, according to the Department of Consumer and Business Services. While injured workers claims are down, so is funding for return-to-work programs, anti-fraud efforts, and overall monitoring of state workers compensation systems. At the Workers Compensation Research Institute's (WCRI) Annual Issues and Research Conference.
Dr. Richard Victor, WCRI executive director, said businesses have been under more pressure to eliminate employer costs that do not improve worker outcomes. The WCRI noted that the industry is also trying to figure out the effect of the recession on the system across different industries and of aging employees who stay in the workforce longer due to the economic downturn.
Some research released in 2010 raised a few eyebrows
The U.S. Labor Department reported that local and state government workers have much higher rates of injuries and illnesses requiring days away from work than workers in private industry. The rate among local and state government workers was 180 to 185 cases per 10,000 full-time workers compared to 106 cases for private firms. This was the first time incidence rates for public workers have exceeded those for private industry.
The Associated Press reported that U.S. oil refineries have an ongoing problem with accidents that turn deadly, losing four times as much money from such incidents than refineries in the rest of the world. The problem was highlighted by a deadly string of explosions, including the BP Deepwater Horizon explosion in the Gulf of Mexico that killed 11 and one that killed four people at a Tesoro Corp. refinery in Washington state.
In April, Massey Energy said it would provide financial packages providing health care and other benefits for the families of 29 miners killed in the nation's worst mining disaster in 40 years at the Upper Big Branch mine in West Virginia. The tragedy sparked another national debate about safety at the nation's mines.
American International Group Inc. agreed to pay $146.5 million to state insurance regulators for alleged under-reporting of Workers Compensation premiums to states more than a decade ago. The deal resolves a multi-state probe that examined whether AIG violated premium reporting rules governing Workers Compensation insurance from 1985 to 1996. The misreporting had the effect of lowering the premium taxes and premium-based assessments AIG paid, according to regulators.
As always, there were noteworthy Workers Compensation events at the state level, where the coverage is regulated.
- New York tried to rein in the use of self-insured trusts, following the recommendation of a task force formed in the wake of several high-profile trust collapses over the last several years. Bowing to pressure from insurers and agent groups,
- Massachusetts eased Workers' Compensation paperwork requirements for some out-of-state contractors.
- Connecticut saw the largest Workers Compensation payouts in 12 years in connection with deaths at a Manchester beer distributor.
- A deal reached by New York City and workers exposed to toxic dust at ground zero after the Sept. 11 terrorist attacks was expected to resolve a majority of the lawsuits over the city's failure to provide protective equipment to the responders.
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