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Will Workers Comp Fall Off That Nasty Fiscal Cliff?

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Nasty Fiscal Cliff – Will Workers Comp Fall Off It?

Will Workers Comp be affected if we all fall off that nasty fiscal cliff ?  I think we first need to define what exactly is the fiscal cliff.  According to the article from the link:

Hand with pen Analyzing financial paper Nasty Fiscal Cliff Data with Calculator
Wikimedia Commons – Dave Dugdale

“The now infamous phrase was coined by Federal Reserve Chairman Ben Bernanke in February 2012, during one of his required appearances before Congress on the state of the U.S. economy. He described … “a massive fiscal cliff of large spending cuts and tax increases” on Jan. 1, 2013. “ 

If one looks through the automatic cuts and tax increases that will hit on New Year’s  Day, the insurance markets will be affected in the short-term only, if at all.   As I pointed out in a recent post, Workers Comp has been stable through most of these so-called financial crises.   

The hardening and softening of the insurance markets, especially Workers Compensation has had very little to do with the economy.   The very basic definition of the hard market is when there are not enough suppliers (insurance carriers) to meet the demand by business for coverage.   

The hardening or softening of the market has not followed any type of trend or financial forecast lately.  Did the market immediately harden after the 2008 – 2009 financial crisis?  It did not even blink.  I thought the market would harden over the past three years.  It has not whatsoever. 

Woman Showing Nasty Fiscal Cliff Chart On White Board
StockUnlimited

In my opinion, the supply by Workers Comp insurers may have shrunk over the last few years.  The contraction was met with a definite shrinkage in employer numbers, or at least the payrolls and number of employees have been greatly reduced recently.  

Workers Comp is still a very stable industry when compared to others.  According to an Insurance Information Institute article from November,  “In September 2012 property/casualty (P/C) carrier employment slipped by 300 vs. August.” 

There are  528,000 P/C employees in total.   The one month drop equals .005% of the industry.  The positive news is the P/C employees actually gained 1,600 jobs since September 2011.  

I will cover more on this subject next time. 

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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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