The nation’s workers’ compensation insurers suffered an 86 percent decline in profits, to $144 million during the first nine months of 2000 from a $1 billion peak during the same period in 1998, according to Weiss Ratings Inc., an independent provider of insurance company ratings and analyses. This is a much more severe decline than the 6 percent drop in overall profits experienced by the property and casualty insurance industry during the same time period. Moreover, the failure rate among workers’ comp insurers in 2000 was 12 times higher than the failure rate of all other property and casualty insurers combined.
Among workers’ comp insurers, the failure rate was 7.7 percent (14 of 181). In contrast, among property and casualty insurers of all other categories, the failure rate in 2000 was only 0.6 percent (14 of 2,343). One fifth (20.7 percent) of the 2,524 property and casualty insurers rated by Weiss are considered “Weak.” In contrast, almost one third (31.5 percent) of the 168 workers’ comp insurers are rated “Weak.”
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