Companies Maintaining Realistic Outlook of Recession Impact on Insurance Claims, According to Wausau-sponsored Survey

Although a U.S. economic recession would not be good news overall for employers, most don't believe a recession would drive up workers; compensation claims, according to a new survey of financial executives.

Only 23 percent of respondents said a recession would cause an increase in their workers’ compensation claims. Compared to 62 percent who predicted there would be "no change," 6 percent who said claims would decrease and 9 percent who said they "don't know." Respondents had a similar response when asked how a recession would impact their general liability insurance claims.

The recession questions were part of an independent survey of 255 financial executives, the fourth annual “Wausau Multiline Productivity Poll,” conducted by Guideline, a national research firm.

"At a time when media reports raise recession concerns, we believe most employers are maintaining a level-headed risk management outlook," said Wausau Insurance President and COO Susan Doyle.

The survey findings show employer perceptions are generally consistent with a 50-year historical data analysis by NCCI Holdings Inc., a workers’ compensation research organization. According to NCCI, during recessions, the frequency of workers’ compensation claims tends to decline, due to the lower claim frequency among the more experienced workers who remain in the workforce after the effects of a slower rate of hiring of new workers and layoffs.*

Among other key findings in the Wausau-sponsored survey:

In each of the past 3 years, about 60 percent of respondents said their insurance agents or brokers "always or usually" encourage them to place multiple (at least two) lines of insurance with one carrier. In the same period, two-thirds of respondents continued to say their agents or brokers "always or usually" counsel them to consider the total cost of risk, not just premiums and deductibles, when considering their risk management needs.
In the 2008 survey, 80 percent of respondents said they would rather have their coverage priced by a single multiline underwriting team than by separate underwriting teams for each line of insurance. Among this large majority favoring a multiline underwriting team, nearly 90 percent "completely or somewhat" agreed the multiline team is more likely to ensure a fairer price, broader expertise, and better knowledge of their business.

"Our annual independent survey continues to confirm key messages we're hearing from our agents, brokers and their clients," Doyle said. "Insurance buyers want carriers who can provide multiline coverage and service teams with a focus on the total cost of risk. The survey shows a broadening understanding of the total cost of risk among insurance buyers. Agents and brokers continue to play an important role in this critical area."

Among other key findings:

For the fourth year in a row, at least 60 percent of respondents estimated they save at least $2 in productivity expenses for every $1 of reduced expenses for workers’ compensation claims. Productivity expenses include a wide variety of indirect costs incurred beyond the cost premiums and deductibles. The survey has shown a gradual increase in awareness of these indirect productivity expense factors for other lines as well. For the first time in four years, more than half of respondents estimate they save at least $2 in productivity expenses for every $1 of reduced expenses for general liability, commercial auto, and property claims.
Over the past 3 years, about 60 percent of respondents said it would be an advantage to have multiple (at least two) lines of insurance with one carrier if their company experienced a catastrophic loss due to a natural disaster or terrorist attack.
For the fourth year in a row, respondents felt that general liability and property (two coverages commonly combined in package policies) and workers’ compensation and general liability were the two coverage pairs most likely to achieve significant efficiencies when combined with one insurance carrier.

Source: Wausau Insurance

Posted: Friday, July 11, 2008 12:00:00 AM. Modified: Friday, July 11, 2008 4:18:37 PM.

(317) 875-5250 - Indianapolis | (202) 628-1558 - Washington, D.C.

Contact NAMIC | Press | Advertise | Sponsor

We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.