Carrier claim outcomes and trends: What to watch the rest of the year and beyond.
A MESSAGE FROM OUR CHIEF CLAIMS OFFICER
The extensive and diverse data Sedgwick holds as the leading solutions provider in this space allows for sophisticated industry benchmarking and data analysis that can pinpoint trends, identify cost drivers and track performance metrics. How we use our robust bank of data to benefit our carrier partners is one of our many differentiators.
This report provides an overview of the current metrics used for our carrier programs and contextualizes the trends we see in our book of business within the broader story of the industry environment. It also includes insights from Sedgwick’s expert practice leads to offer perspectives on the previous quarter and an outlook on trends to watch for in the months ahead.
While the report can offer useful information for your organization, it is not meant to be used as a side-by-side comparison with the data from your particular programs.
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K. Max Koonce Chief claims officer, Sedgwick |
MARKET SUMMARY
Workers’ compensation
Workers’ compensation (WC) remains the most profitable segment of the commercial property and casualty insurance (P&C) line. Key insights from NCCI State of the Line Report compiled, based on insurer results for the 38 states where NCCI recommends WC rates, include:
| • | WC continues to have the largest underwriting profitability of all the P&C lines shown, with a calendar year net combined ratio of 86% and a 23-point operating gain in 2023 — a 14% underwriting gain combined with a 9% investment gain. |
| • | Severity changes were considered moderate for 2023 with increases of 2% for medical claim severity and 5% for indemnity claim severity. |
| • | WC’s 2023 accident year combined ratio is 98% with prior years continuing to experience downward reserve development. |
| • | WC’s share of total P&C industry net premium has decreased from nearly 8% in 2003 to 5% in 2023. |
| • | Net written premium for the WC insurance market grew by just 1% from 2022 to 2023 — from $42.5 billion in 2022 to $43 billion in 2023. |
Liability
General liability
General liability (GL) insurance faces a challenging market with 25 consecutive quarters of rate increases driven by increased claims severity, higher litigation costs and economic inflation.[1]
| • | Experts predict up to a 10% increase in GL premiums in 2024.[2] |
| • | The U.S. GL is currently experiencing a surge in demand due to increasing litigation risks and the need for comprehensive coverage. [3] |
Auto liability
Commercial auto premiums increased by 9.8%, with experts suggesting that the increases were driven by vehicle repair cost inflation, a rise in nuclear verdicts and an increase in accident rates per the Council of Insurance Agents and Brokers.
| • | U.S. commercial insurance rates rose 3.9% in Q1 2024, driven by auto, property and cyber insurance, with transportation seeing the highest increases at 6.7%. |
| • | According to Marsh McLennan, the risk for nuclear verdicts extends across industries but is exceptionally high in commercial auto, product liability, directors/officers, malpractice and professional liability cases. |
References
[1] Brown & Brown
[2] CBIZ 2024 Property & Casualty Market Outlook
[3] Statista
WORKERS’COMPENSATION
