Workers Comp Market Affected By Economy

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Workers Comp Market – Hardening?

How Will The Economy Affect The Workers Comp Market? This is one of my most debated topics lately. The opinion that I have is not very popular. I do not believe that there are any internal dynamics to the market becoming soft or hard.

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As I have said for many years, the stock market controls the insurance markets directly. When insurance carriers can make quick and good profits off the premium dollars, then the insurance carriers can become much more competitive on price. During the 1990’s, the stock market was volatile and climbing. If a Workers Comp carrier can discount a premium 10% and then invest the money and make a 20% profit, they are going to look to bring in a large volume of premiums quickly. This results in a soft market.

With the recent plunge in the stock market, I would expect a hard market. Insurance carriers will be investing money in interest-bearing accounts that are safe investments. Who can blame them? If the carriers can only invest the premiums in low-earning accounts, there will be no price competitiveness. This will result in a hard market.

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There are other influences on the insurance market. One of them is the insurance companies faltering and going into receivership. With the failure of many banks in the near future, insurance companies are sure to follow. The smaller number of insurance companies will lower the competitiveness and harden the market even more.

Bottom Line – It may be best to prepare for the very limited availability of insurance coverages. If insurance carriers are going to cherry pick, make sure that your company is one of the nice cherries. There are many suggestions in this blog to help you in a time of a tight insurance market.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications

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