BrickStreet Insurance’s profit from running West Virginia’s workers’ compensation program more than doubled in its second year of business, but those heady days could be ending.
In July, the company will face competition from other insurers for the first time. The consequences of that – higher costs, lower revenue – will bring huge profits to an end, the company’s top executive believes.
“The workers’ compensation market will open to competition this summer and, given the competition, our overhead is going to increase because our premium levels are going to go down,” said Greg Burton, the company’s president and chief executive officer. “Then add on that we’re going to start paying taxes in the future, this level of profit probably won’t happen again.”
Brickstreet reported a 2007 profit of $185 million last week, compared with $70.7 million in 2006. A huge advantage for the company has been its federal tax exemption.
Over the two years it has been in business, Brickstreet has avoided paying $194 million in taxes under the three-year tax exemption secured for it by the state.
“We continue to provide better customer service, and we got injured workers back to work faster in ’07 than ’06, but we also don’t pay taxes right now,” Burton said.
The company was created from the state Workers’ Compensation Division in 2006, and the state law creating it bestowed the tax break and monopoly status, which comes to an end July 1.
Burton expects big competitors to include American Insurance Group, State Farm and Nationwide, among others.
Topics Carriers Profit Loss Workers' Compensation Virginia West Virginia
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