Liberty Mutual, Old Republic book highest US workers' comp loss ratios in Q2

Liberty Mutual Holding Co. Inc. and Old Republic International Corp. reported the highest direct incurred loss ratios for workers' compensation insurance in the second quarter of 2023, a period in which the business line's loss ratios improved year over year.

Despite posting the highest direct incurred loss ratios, Liberty Mutual saw a significant improvement in loss ratio for the second quarter with 59.4%, down from 63.5% reported in the first quarter and 60.5% reported in the prior year period. Old Republic Insurance followed at second place, with a second-quarter loss ratio of 55.9%, a slight deterioration from the 53.7% posted in the second quarter of 2022.

US workers' compensation direct premiums earned rose a modest 0.61 percentage points year over year in the second quarter, and the industry's overall direct loss ratio improved by approximately 2.6 percentage points. Direct premiums earned grew to $13.88 billion from $13.27 billion a year earlier but are exclusive of New Jersey, which does not post quarterly data as of 2023.

Direct premiums during the second quarter were the highest during the period in the last five years, surpassing 2019's $13.51 billion.

Direct incurred loss ratios also improved from the second quarter of 2022, and 2023's second quarter ratio of 44.2% was the lowest in the second quarter ratio of the past five years.

Consistent improvement

A few of the 10 largest workers' compensation insurers saw loss ratios deteriorate year over year, while most, such as Zurich Insurance Group AG, saw significant improvement.

After posting the largest direct incurred loss ratios for workers' compensation during the first quarter, Zurich's ratio declined by nearly 40 points, falling from 69.2% to 29.1% during the second quarter. This decrease shifted Zurich from the first position to ninth, with Chubb Ltd.'s 24.5% slotting into 10th place.

The Hartford Financial Services Group Inc.'s direct incurred loss ratio improved by 1.4 percentage points year over year to 43.0% in the second quarter.

In a regulatory filing, the insurer credited "lower than previously estimated claim severity" for workers' compensation reserve decreases from 2014 through 2018.

Great American Insurance Co. saw the most significant year over year deterioration in loss ratio among the top 10 companies. The insurer's second quarter 2023 loss ratio was 45.7%, up from 38.3% reported in the prior year period.

Market share shifts little

The Travelers Cos. Inc. was the largest workers' compensation insurer in the US during the second quarter of 2023, maintaining its position from the prior quarter.

The insurer wrote $3.87 billion in direct premiums during the quarter, followed closely by The Hartford, which wrote $3.73 billion, and AmTrust Financial, which wrote $3.40 billion.

The Hartford and Travelers both control about 7% of the overall workers' compensation market each, while AmTrust Financial controls about 6% of the market, making it the third-largest insurer in the business line.

Amtrust Financial saw the largest year-over-year increase in premiums written during the second quarter, increasing approximately 20.9%.

AF Group posted the largest and sole decrease in premiums written among the top 10, dropping 5.8% year over year.