Comp Outlook factors out the "mute" impact of COVID – Enterprise Insurance
AM. On Wednesday, Best & Co. revised its market segment outlook for the US market for workers' compensation insurance from negative to stable and identified several influencing factors.
Most importantly, A.M. Best cites an unexpected "silent" effect the COVID-19 pandemic had on insurers' balance sheets and operational performance.
The negative impact of the pandemic on insurers' sales is decreasing and premium levels are returning to pre-pandemic levels as businesses – particularly the hospitality and service industries – continue to recover in 2021.
Another driving factor that stabilizes the market, AM. Best of all, the Comp segment's solid risk-adjusted capitalization will withstand the effects of the pandemic. According to the report, this segment remains in a redundant losing position even though the redundancy is decreasing.
The insurance market also continues to show favorable combined ratios, which are borne by constant loss ratios. Underwriting results have deteriorated only marginally as they have benefited from less fraud, fewer work accidents and lower defense costs, the report said.
Researchers are also identifying potential offsetting factors for the market to watch. The possibility of claims latency and the potential long-term health effects of the virus remain of concern, A.M. Best says, along with government and legislative actions that could affect the final cost of certain claims.