Florida Workers’ Compensation Market Remains Competitive: Report

January 5, 2011

Florida’s workers’ compensation market remains competitive with more than 250 private insurers writing coverage and only a fraction of business being funneled to the residual market.

Also, availability does not appear to be a major concern in the aggregate, although small firms, new firms and construction firms may face some market shortfalls in the voluntary market, according to the latest government report on the state of the market.

“Based on the number of entities and market shares of actively writing companies in the market, the number of entities entering and exiting the market and the financial performance of the entities in the market, Florida’s workers’ compensation market can readily be characterized as a competitive market,” the report issued by the Office of Insurance Regulation (OIR) concludes.

The report is based on 2009 data.

The report shows the Florida market features 260 entities writing workers’ compensation insurance — 255 private insurers, four self-insurance funds, and the Florida Workers’ Compensation Joint Underwriting Association (FWCJUA).

None of the private insurers in Florida have sufficient market share to control pricing, according to the report. Florida’s largest workers’ compensation writer is Bridgefield Employer Insurance Co. with 13 percent market share. As was the case in last year’s report, the 10 largest companies wrote under 50 percent of the workers’ compensation insurance premium in Florida.

The residual market, the FWCJUA, had 746 policies as of October 2010 with corresponding premiums of $5.5 million. This is a fraction of Florida’s overall workers’ compensation premium, which reported a total of $1.71 billion in written premium in the private market in 2009, ranking Florida seventh nationally.

The state’s four self-insurance funds represent 5.6 percent of the workers’ compensation insurance market in Florida.

The report compares Florida with the five other most populous states: California, Texas, New York, Illinois and Pennsylvania and finds the Sunshine State’s workers’ compensation market holds its own:

  • Of the six most populous states, Florida is the largest market dominated by private market insurers, rather than a state sponsored residual market. In New York, California, Texas, and Pennsylvania the entity with the largest market share is the state sponsored entity, while in Florida and Illinois, the largest market share is held by a private insurer.
  • Florida is, by population, the fourth largest state, yet ranked sixth in the most workers’ compensation insurance premium written in 2009.
  • For the six large states, the number of insurance companies writing workers’ compensation insurance varied between 212 and 311. Florida ranks fourth with 255 insurance companies writing workers’ compensation insurance in 2009.

In terms of loss ratios in 2009, the Florida workers compensation industry also compared favorably, with a 54.29. The 6 states ranked by loss ratios:

  1. Illinois 82.98%
  2. New York 80.16%
  3. California 68.50%
  4. Pennsylvania 66.20%
  5. Florida 54.29%
  6. Texas 43.19%

Comings and Goings

The Florida market continues to attract new competitors and more insurers are entering than exiting.

During 2009, eight new entities entered the market. Two were new to the state, while six companies were already operating in Florida and expanded by adding the line of workers’ compensation.

Last year (2010), 13 new entities entered the market through September. Four — Compwest Insurance Co., Cornhusker Casualty Co., Maine Employers Mutual Insurance Co., Triumphe Casualty Co. — were new to the state, while one (Argonaut Great Central Insurance Co.) became an admitted carrier. Eight companies were already operating in Florida and expanded by adding workers’ compensation. In addition, one company converted from a self-insurance fund to a property/casualty insurer (Retailfirst Insurance Co.).

The new entities authorized to operate in the Florida workers’ compensation insurance market in 2010 together with their state and city of domicile were:

  • Argonaut Great Central Insurance Co. – Chicago, Illinois
  • Capitol Indemnity Corp. – Middleton, Wisconsin
  • Compwest Insurance Co. – San Francisco, California
  • Cornhusker Casualty Co. – Omaha, Nebraska
  • Foremost Insurance Co. – Caledonia, Michigan
  • Foremost Property and Casualty Insurance Co. – Caledonia, Michigan
  • Maine Employers’ Mutual Insurance Co. – Portland, Maine
  • National Casualty Co. – Madison, Wisconsin
  • Praetorian Insurance Co. – Harrisburg, Pennsylvania
  • QBE Insurance Corp. – Harrisburg, Pennsylvania
  • RLI Insurance Co. – Peoria, Illinois
  • Triumphe Casualty Co. – Mechanisburg, Pennsylvania

During 2009, eight entities left the Florida workers’ compensation market. Two were insolvent – First Commercial Insurance Co. and Park Avenue Property and Casualty Insurance Co. As of October 2010, the Florida Workers’ Compensation Insurance Guarantee Association had paid $18.1 million in losses for First Commercial and $6.2 million for Park Avenue.

During 2010, six entities left the market. One was due to insolvency – Pegasus Insurance Co. The guaranty fund had paid $30,491 in losses form Pegasus as of October.

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