Workers’ compensation insurers paid $118 for every $100 collected in premium in 2010. In 2011 it’s expected that insurers will pay $121 for every $100 in premium dollar received. These results - combined with the lowest interest rates on record, a volatile stock market and declining real estate values mean workers’ comp costs are on the increase. Insurers can no longer count on investing your premium dollars to make up for their underwriting losses. 

Additionally, a fundamental shift in supply and demand has impacted the insurers. Alan Quinlan, Administrator of the ABC Workers’ Compensation Trust, explains that the “soft market” phase of the insurance market cycle has benefitted insurance buyers for several years as the “supply” of insurance has exceeded “demand.” Now that the dynamics have shifted underwriters are expected to impose tougher underwriting standards and raise rates at every opportunity. The “soft market” is over. It is the perfect storm for workers compensation premiums to increase and you need to be prepared. 

So how do you prepare your company for the challenges ahead? First, don’t be caught in a jam. Insurance agents like to deliver renewal terms at the last minute, especially when the news is bad. Be prepared, start the process early, and why not consider the ABC Workers’ Comp Self-Insurance Trust as an option? 

Members of the ABC Workers’ Comp Trust have essentially insulated themselves from the market swings that are inherent in the insurance industry. The Trust partners are committed to the effective operation of the Trust. At their Annual Meeting in June Trust members received $965,000 in dividends earned during the past several years of profitable operations. The effect was to reduce members’ 2011 workers’ compensation costs by 48 percent. Would cutting your workers’ comp costs in half this year help your bottom line?  

For more information on how you and your company can benefit by Membership in the Trust, contact the ABC office at 603-226-4789.