A New Partner

Those rope-burned hands on this week’s cover graphically depict the dire straits of the workers’ compensation market in California. Safe to say, it’s now in full-blown crisis, as overused and overblown as that word is.

The most recent evidence of that, of course, is the withdrawal of the California State Compensation Insurance Fund, which writes a hefty chunk of the state’s workers’ comp business, from Best’s interactive rating process. This on the heels of a downgrade from the rating company. IJ reporter Cynthia Beisiegel has spent the past two weeks chasing down the implications of that story and her special report on it starts on page 24 of this week’s issue.

Ms. Beisiegel’s report, you’ll note, is augmented by some graphics and statistics supplied by Demotech, Inc., a new feature of Insurance Journal and a neat segue into introducing a new partnership between that firm and this magazine.

Henceforth, Insurance Journal reports, comment and analysis will routinely draw on Demotech’s financial and ratings capabilities. As you may know, Demotech is a Columbus, Ohio-based actuarial services and financial analysis firm which provides a wide variety of filing and technical services to property-casualty insurers, risk management departments and public entity liability pools.

Demotech’s innovative Financial Analysis Ratings model, for example, developed in 1988, was the first risk-based capital or dynamic financial analysis system universally applied to the property-casualty insurance industry. The model is used to flag potential financial problems and to notify the business of potential difficulties, often one year in advance of regulatory action.

Another example is Demotech’s Financial Stability Ratings, which have been Fannie Mae, Freddie Mac and HUD accepted for a decade or more.

Monitored quarterly, the ratings are provided to property-casualty insurers and to title insurers. Annually, Demotech publishes its opinion on the insurance, banking and mortgage sectors of the financial services industry.

We welcome our new relationship with Demotech. In the years ahead, we’ll be drawing on this valuable resource to give added depth especially to our state-specific and line-specific reports to better inform you, our readers.

But that’s not the only news in this week’s IJ.

With the summer sun approaching the yard it’s time for us to take another look at the world of summertime risk, and senior writer Dave Thomas does just that in his report on insurance for summer camps. It concludes that camp insurance, unsurprisingly, is following the path of commercial insurance generally, which is to say it’s becoming much more expensive—and not just from the general liability perspective. Read his report beginning on page 30.

Finally, international senior editor Charlie Boyle rounds out our three-week excursion into crunching the numbers of industry first-quarter results, this time with a look in depth at the investment side of things through the penetrating eyes and mind of the chief economist at Insurance Services Office, Mike Murray.

And more!

Until next time…