Oldwick, NJ -(BusinessWire)- State workers’ compensation funds reported a second year of increased net premiums written (NPW) in 2012, buoyed in part by a hardening market, improved economic activity and the likelihood of increased demand for residual market business. NPW increased 7.1% in 2011 and 13.5% in 2012, reaching $6.9 billion last year, the group’s highest level since 2008, according to a special report by A.M. Best Co.
These state funds compete for workers’ compensation business while also generally serving their respective states as guaranteed markets. Typically during hardening markets, some businesses find it more difficult to afford or secure coverage in the voluntary market and turn to state funds.
Each fund tends to develop its own, unique characteristics, largely depending on its business profile and growth initiatives. Some state funds maintain a steadfast role in the residual market and often contend with political pressure that can affect surplus and rate levels. Others have undergone transformations toward becoming private, mutual insurers. Some funds have taken to writing business beyond their state borders.
Recently, a common thread materialized when the Internal Revenue Service’s (IRS) Exempt Organizations division initiated a review of the tax-exempt status afforded state funds. While still in a preliminary and exploratory phase, any eventual IRS rulings in this regard could have significant impacts on affected state funds’ markets, business strategies and operations.
To access the full report, click here (Sub. Required): http://www3.ambest.com/bestweek/purchase.asp?record_code=214690&AltSrc=26
Source: BusinessWire