Ratemaking Challenges in Today’s Atypical Workers’ Compensation Environment

By: Florida Chamber of Commerce

By Brett Foster

At NCCI’s Annual Issues Symposium 2019, a video shown on the underwriting market cycle discussed the ebbs and flows of the workers compensation industry and how the market has changed since the 1990s.

Soft market typically refers to periods when coverage is widely available and insurance companies lower prices to actively compete for market share. During a soft market, industry reserve deficiencies may build as companies release reserves to offset increasing underwriting losses. On the other hand, hard market generally describes periods of relatively higher prices, tightening underwriting standards, and reserve strengthening.

Today’s workers compensation environment is healthy and competitive. However, industry stakeholders have described the current market as atypical, displaying a hybrid of both SOFT-market and HARD-market characteristics.

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