Workers’ Comp Premium Plunges for Fifth Year in a Row
California’s workers’ comp total direct written premium declined by almost 10% in 2009 down to $6.9 billion from $7.6 billion in 2008, according to data from the National Association of Insurance Commissioners. The latest figure is in sharp contrast to where the market was just five years earlier at a whopping $16.1 billion. Since then premium volume has shrunk by $9.2 billion.
Even as premium volume declines, the market continues to reshuffle the deck among the top 10 writers in the state with only one notable exception dropping off the list. But while the names are largely the same their premium totals show where much of the statewide premium loss originated.
Combined only three of the top 10 carriers – Travelers Group (NYSE: TRV), Hartford Fire & Casualty Group (NYSE: HIG) and Everest Reinsurance Holding Group (NYSE: RE) — increased their writings last year by a combined $180 million. Hartford accounted for $80 million of the increase and Everest Re added $75 million.
Much more common were multimillion declines in written premiums. As expected, State Compensation Insurance Fund led the bunch with a loss of approximately $500 million, but it was not alone in shedding well over $100 in written premium during the year. Liberty Mutual Group, which dropped a spot in the ranking, came in $150 million shy of 2008 totals, while Berkshire Hathaway Group (NYSE: BRKA, BRKB) dropped two spots and $200 million.
Only one carrier from the top of the 2008 list actually dropped out of the top ten. Endurance Reinsurance, which was the ninth largest writer in 2008, had announced early in 2009 that it was exiting the market. It shed over $200 million in premium and dropped to the 35th largest group with just $26 million in written premium.
One other carrier that is changing at the top of the order is Zenith Insurance (NYSE: ZNT), which is being acquired by Fairfax Financial Group (TSX: FFH). At $268 million in written premium last year Zenith retained its spot as the 7th largest workers’ comp carrier in the state and its merger will not change that. Adding Fairfax’s $75 million in written premium still leaves it trailing behind Hartford.
Beyond those 10 carriers, however, the numbers were reflective of the volatility in the market. Overall, the top 10 carriers accounted for $4.5 billion in written premium or 65% of the market. This is down from the 70% market share the group controlled in 2008. Much of that premium slipped to the next tier.
Knocking on the door at number 11 was Southern Insurance Company in the Delek Group (TASE: DLEKG) that gobbled up accounts in 2009, boosting written premiums by $150 million. Southern wrote just over $23 million worth of workers’ comp coverage in 2008 when it was the 36th largest carrier. And Star Insurance Company in the Meadowbrook group increased its writings by nearly $100 million, up from just $4.3 million the prior year.
See the chart to the right for the rest of the movers and shakers.
| California’s 20 Largest Workers’ Comp Insurer Groups | 2009 Direct Written Premiums | % Market Share 2009 | % Market Share 2008 | 2008 Direct Written Premiums | Rank in 2008 |
| State Compensation Insurance Fund | 1,287,041,223 | 18.6 | 22.6 | 1,725,240,012 | 1 |
| Zurich Insurance Group | 562,117,050 | 8.1 | 7.4 | 568,232,737 | 3 |
| American International Group | 540,236,867 | 7.8 | 7.5 | 575,518,002 | 2 |
| Travelers Group | 508,521,763 | 7.4 | 6.3 | 482,736,075 | 5 |
| Liberty Mutual Group | 363,155,602 | 5.3 | 6.7 | 510,200,566 | 4 |
| Hartford Fire & Casualty Group | 350,466,696 | 5.1 | 3.5 | 268,018,023 | 8 |
| Zenith National Insurance Group | 267,587,914 | 3.9 | 4.3 | 325,369,490 | 7 |
| Berkshire Hathaway Group | 235,576,509 | 3.4 | 5.7 | 438,598,671 | 6 |
| Everest Reinsurance Holdings Group | 204,778,508 | 3 | 1.6 | 125,981,378 | 14 |
| Employers Group | 184,447,483 | 2.7 | 2.9 | 222,408,061 | 10 |
| Delek Group | 174,711,728 | 2.5 | 0.3 | 23,188,876 | 36 |
| Ace Limited Group | 155,331,954 | 2.3 | 1.7 | 131,403,257 | 13 |
| American Financial Group | 141,760,308 | 2.1 | 2.3 | 174,858,928 | 11 |
| American Assets Group (ICW) | 135,286,292 | 2 | 1.8 | 133,969,417 | 12 |
| SeaBright Insurance Company | 123,360,560 | 1.8 | 1.3 | 102,523,170 | 18 |
| Chubb & Son | 110,574,219 | 1.6 | 1.6 | 123,366,780 | 15 |
| BCBS of Michigan Group(Compwest) | 109,521,679 | 1.6 | 1.6 | 120,834,283 | 16 |
| Meadowbrook Insurance Group | 107,755,547 | 1.6 | 0.06 | 4,653,969 | 56 |
| Majestic Insurance Company | 105,111,721 | 1.5 | 1.4 | 103,896,484 | 17 |
| Lightyear Delos Group | 85,605,845 | 1.2 | 1.3 | 101,092,812 | 19 |
