Industry Trends | Read Time: 3 minutes

IVANS Index: More Jobs and Better Wages Are Pushing Workers' Comp

June 22, 2017

Brian Wood By: Brian Wood

IVANS Index is a data-driven report of current conditions and trends for premium renewal rate change of the most placed commercial lines of business in the insurance industry. Data collected in the IVANS Index enables insurers to determine competitive rates and the most profitable lines of business for investment. To learn more about IVANS Index, read IVANS Index: Get Ahead of Renewal Pricing for Your Clients.

Monthly Update: Workers’ Compensation

Workers’ Compensation has been the one holdout product in the IVANS Index to remain in negative territory since the beginning of the year. So what finally pushed Workers’ Comp into positive territory? Exposure.

The states that contributed most to the uptick include Colorado, Florida, Illinois, Minnesota, New Jersey, New York, Oklahoma and Texas. Many of these states have pushed for Workers’ Comp rate decreases over the past year. The Colorado Division of Insurance saw a 2.4% decrease in Workers’ Comp rates effective January 1, 2017.

The one substantial state difference in our analysis is Florida. Given the enacted state rate change, effective December 2016, Florida insureds have seen an average Workers’ Comp rate change of 10.2% since the beginning of the year. In addition to the state mandated rate increase, Florida has also seen strong economic growth with an April 4.5% unemployment rate, 2.9% wage increase and 3.1% quarterly growth rate.

Economic improvement in these states is contributing to the move upward in the IVANS Index. States that contributed to the upward Workers’ Comp movement have strong economic results, particularly strong unemployment rates, wage growth and quarterly growth rates.

There are many states with near all-time best unemployment rates. Even states like Illinois and Texas, with 4.7% and 5.0% unemployment rates, respectively, are still within 1 point of their best ever rate.

The average wage growth was 0.1%, with most states impacting Workers’ Comp showing far more positive results. The combination of strong unemployment figures and wage growth appear to have acted as a contributing force to move Workers’ Comp above zero.

Future actions by states like New York, where the New York Compensation Insurance Rating Board has approved a rate decrease of 4.5% effective October 1st, may cause Workers’ Comp to move back into negative territory sooner than later.

Further analysis of Workers’ Comp movements will be included in the IVANS Index Q2 Report.

For further insights into premium renewal rate change across the industry, view the latest IVANS Index report now.

Brian Wood

Brian Wood

Brian Wood, Vice President of Data Products Group for IVANS, develops innovative and data-driven applications, tools and services for the insurance industry. Prior to this position, he co-founded EvoSure, which was acquired by Applied in Sept 2015. Brian spent 10 years with Marsh & McLennan as Senior Vice President of Strategy and Business Analysis where he developed global insurance distribution platforms. Brian began his career in insurance building the first company to bind insurance online, (a Trilogy company) which was acquired by Marsh & McLennan in 2001.