Recession Wouldn't Drive Up Workers Comp Claims, Executives Predict |
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Written by U.S. Insurance News
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Monday, 21 July 2008 |
Even as the U.S. economy toys with the idea of a recession, most financial executives don't believe a recession would drive up workers compensation claims.
The fourth annual Wausau Multiline Productivity Poll shows that only 23 percent of respondents said a recession would result in an increase in their workers compensation claims.
Almost two-thirds (62 percent) foresee no change, 6 percent said claims would decrease, and 9 percent said they didn't know. Respondents had a similar response when asked how a recession would impact their general liability insurance claims.
"At a time when media reports raise recession concerns, we believe most employers are maintaining a levelheaded risk management outlook," said Susan Doyle, Wausau Insurance president and COO.
Overall, employer perceptions are consistent with a 50-year historical data analysis by NCCI Holdings Inc., a workers compensation research organization. According to NCCI, the frequency of workers compensation claims tends to decline during recessions, due to the lower claim frequency among the more experienced workers who remain on the job after the effects of layoffs and a slower rate of hiring of new workers.
The survey shows that for the fourth consecutive year, at least 60 percent of respondents estimate they save at least $2 in productivity expenses for every $1 of reduced expenses for workers compensation claims. Productivity expenses include a variety of indirect costs incurred beyond the cost premiums and deductibles. The annual survey has shown a gradual increase in awareness of these indirect productivity expense factors for other lines as well-for the first time in four years, more than half of respondents estimate they save at least $2 in productivity expenses for every $1 of reduced expenses for general liability, commercial auto, and property claims.
The Wausau survey gauges executives' opinions and practices of having multiple lines with just one carrier. In each of the past three surveys, about 60 percent of respondents said their insurance agents or brokers "always or usually" encourage them to place at least two lines of insurance with one carrier. In the same period, two-thirds of respondents continued to say their agents or brokers "always or usually" counsel them to weigh the total cost of risk, not just premiums and deductibles, when considering their risk management needs.
In the 2008 survey, 80 percent of respondents said they would rather have their coverage priced by a single multiline underwriting team than by separate underwriting teams for each line of insurance. Among this large group, nearly 90 percent "completely or somewhat" agreed the multiline team is more likely to ensure a fairer price, broader expertise, and better knowledge of their business.
"Our annual independent survey continues to confirm key messages we're hearing from our agents, brokers, and their clients," Doyle said. "Insurance buyers want carriers who can provide multiline coverage and service teams with a focus on the total cost of risk."
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