So, is it a hard market for Workers Comp?
It’s a question I’ve been pondering for a while now, and especially working on our recent webinar, . It seems you can’t avoid the topic of the hardening market but it’s really quite hard to ascertain when and if it truly has hardened. Leading up to the webinar, I spoke with our industry experts, gathered insight from our customers, and scoured industry publications to get the lowdown – but it turns out that the answer is “it depends”. Nailing it down seems to be difficult; however, most agree that, whether it is or isn’t fully hardened, Workers Comp (and Commercial Property) is leading the pack toward a hard market.
Given the divided response in the media, we couldn’t pass up the opportunity to query our recent webinar audience of insurers. Interestingly, not unlike in the media, there was a difference of opinion. Polling a group of Workers Comp professionals, we found that only 19% believe the market to be hard, while 69% are starting to see signs of a hardening, leaving the remaining 12% believing things still need to change to bring about a true hard market.
As an insurance solution provider, we’re constantly examining not only the market conditions but how these conditions affect our customers’ needs and product use. What we’ve consistently found is that insurers will have variable risk appetites and that underwriting guidelines and pricing will need to be flexible and responsive to market changes. Adjustable underwriting rules and the ability to scale to respond to market changes and volume increases will be paramount. Commercial lines carriers focus on differentiation through outstanding service and relationship building, but that paradigm will shift to be more intensively focused on price – the emphasis to be competitive and capture the best price for the best business. Our research has shown that insurers have a constant requirement for robust underwriting management systems in both hard and soft markets. However, what does change is the emphasis, the manner in which insurers use the same underwriting system they used in a soft market to optimize for a hardening market.
With the primary focus on speed and volume, emphasis should be placed on:
- Tracking exposure and monitoring against established levels to ensure appropriate referral rules are in place to kick in as necessary.
- Empowering underwriters with visibility (at their fingertips) to where and how the business is being written and how it is impacting not only their individual book but also the overall company performance.
- Collaboration in real-time, facilitating proposal options, inviting conversation rather than trading emails back and forth or the headache of multiple proposals.
Amidst the din of mixed opinion and varying estimations of where the market currently stands [soft, hard or getting there], it is clear that behaviors are shifting. 60% of our webinar participants responded that their organizations have done something differently in response to the hardening market. Recent headlines also support the winds of change thinking and shifting of behaviors; NCCI methodology for premium calculations, Workers’ Comp State Fund Market Beginning to See Some Hardening, and ‘Firming’ the Consensus Word Among Commercial Lines Executives. For certain, change is upon us. I look forward to helping influence and facilitating the industry’s ability to respond to the opportunity this change will bring.