Reserve problems continue to plague workers' comp. (Loss/Risk Management Notes).Terrorism exposures and inadequate reserves are dogging the workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. industry, said Robert Hartwig, senior vice president and chief economist The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the for the Insurance Information Institute, during a presentation to the American Society of Workers' Compensation Professionals in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of . Companies are being asked to underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. and cover terrorism exposures that would normally be "war" risks, as the events are termed terrorist acts and not acts of war Tom Clancy's Op-Center: Acts of War is a technothriller by Jeff Rovin Plot introduction The mobile Regional Operations Center (ROC) in Turkey investigates a dam blown up by Kurdish terrorists. by the federal government, Hartwig said. Surplus capacity in the property/casualty industry peaked at $336.3 billion in mid-1999 and has fallen to $285.2 billion since then, with 25% of capacity lost in the past two years despite record capital raising by companies, Hartwig said. Surplus is now lower than at year-end 1977, he said. Insolvencies in 2002 were double the 10-year rate in 2002, and that rate will continue, Hartwig said. Deficient loss reserves was the cause of insolvencies in 51% of the companies in 2002, he said. As of 2002, the workers' comp market had a $21 billion reserve deficiency reserve deficiency A shortage in funds set aside as a reserve for a specific purpose. For example, during a recession a firm may find the reserve fund covering allowance for bad debts deficient when the amount of bad debts exceeds expectations. , he said. For 2002, the property/casualty industry saw a 14.1% increase in premiums with an improvement of the overall combined ratio to 107 from 115.9 in 2001, Hartwig said. "The bottom line is the industry still lost money," he said. While the industry can expect better than a 12% increase in premiums in 2003, it will still be a losing proposition if the combined ratio does not improve, Hartwig said. |
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