Zenith Insurance’s Marketing Move Was Unique
Zenith Insurance’s marketing program angle involved showing how little they increased their rates. A few California Workers Compensation Insurance carriers have filed lower rates than what is recommended by California’s Workers’ Compensation Insurance Rating Bureau (WCIRB).
No matter what the decision California Insurance Commissioner Steve Poizner issues regarding a mid-year rate increase, several workers’ comp carriers have ignored their recommended heavy increases. The new recommended number for the mid-year increases is 23.7% recommended by the Workers’ Compensation Insurance Rating Bureau.
Two insurance carriers increased their rates by only 10%. Zenith increased their rates by only 4%. Poizner cut 11 points off the Bureau’s after factoring out the State Fund’s results which is responsible for much of the increase in its current recommendation. As I have said in prior posts, July 1 will be a very interesting time for the Workers Comp market in California. Poizner has performed well in doing what is right without political influence.
I have read quite a few articles that questioned the very small increase by Zenith. Zenith has always had disciplined underwriting. The articles also mentioned that Zenith had poor financial results. Zenith wrote 4.26% of the California market, which was down from the 4.38% market share in 2007. The hallmark for how insurance companies are performing is A.M. Best. Zenith’s A rating was recently reaffirmed by A.M. Best. This means that Zenith knows what they are doing. An A-rated insurance carrier in this market is very solid.
I think the articles missed one important point. The publicity around cutting their rate increases well below the market is great marketing for Zenith. They will also place themselves as an attractive carrier to place business with agents. Zenith has a very good group of underwriters, so this is not the proverbial toss at the dartboard.
Why is this so important? There are quite a few states with this same type of situation. South Carolina, for instance, had skyrocketing increases recommended for years and carriers undercut the recommended increases. West Virginia just moved from a monopolistic system to an open market. The State Fund may not be a monopolistic carrier, but it was close to one in the late 1990s. California is such a large amount of Workers Comp market that any major changes there affect the national statistics on Workers Comp more than any other state.
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