A Warning Sign for Workers Comp Insurers...(and employers)

A new study by an analyst group concludes that a number of Workers Comp insurers are dangerously thin on their reserves, leaving them vulnerable to sudden shocks that, in the past, have undermined the financial stability of insurers.

This study suggests insurers have been keeping reserves too low, which means that if and when the insurers take action to address the deficient reserves, this will result upward pressure on rates on premiums for employers.

More ominously, it suggests that some insurers might be vulnerable to financial shocks. In the past, some well known and long established Workers Comp insurers have failed fairly unexpectedly, producing significant stresses for employers who rely on the insurance market to handle their Workers Comp coverage.

Workers Compensation is a notoriously difficult line of insurance to successfully underwrite in the long run, and more than one insurer thought they were smarter than the average bear, until reality and under-reserved claims unexpectedly proved them very wrong.