Missouri Property, Liability Insurance Profitable

Virtually all lines of Missouri property and casualty insurance, including liability coverage, remained profitable in 1999, although margins fell slightly from the previous year, based on data from the National Association of Insurance Commissioners. Among major lines of insurance, workers compensation continued to rank as the most profitable, with Missouri’s 317 insurers posting after-tax margins of 13.2 percent.

Profits on workers’ compensation insurance fell well below the historic high of 34 percent in 1997, when benefits paid and incurred were dropping much faster than premiums. But the 1999 workers’ compensation profits still exceeded the 11.6 percent level registered in 1992, which had been the highest posted in the previous decade. Shortly thereafter, Missouri enacted landmark workers’ compensation reforms that relied on competition for the first time to set rates and coincided with major efforts by business, labor, insurers and government to reduce the cost of workplace injuries.

Profits then jumped above 20 percent from 1993 to 1998. The overall 1999 figures for Missouri reflected the nationwide trend toward declining profitability for property and casualty insurance, although they still showed that insurers had margins equal to 9.6 percent of the premium dollar. That profitability mark was down from 12.4 percent in 1998, 16.6 percent in 1997 and 13.6 percent in 1996.

Besides workers compensation, major lines of business with positive financial performance in 1999 included: homeowners, 8.8 percent (up from 5.2 percent in 1998); private passenger auto, 6.6 percent (down from 8.3 percent); and commercial auto, 4.4 percent (up from a 1 percent loss in 1998).

Medical malpractice insurance profits dropped substantially, from 31 to less than 5 percent, but margins for this relatively low-volume business have fluctuated widely in recent years. Two lines of insurance posted losses overall in 1999: commercial multi-peril (3.4 percent), and inland marine (5.9 percent), which provides protection for specific, specialty items beyond the normal coverage of a homeowners or commercial policy. Similar figures are not available for life, health and other types of insurance.

Topics Profit Loss Workers' Compensation Property Missouri