Employers Feel Recession Will Not Impact Comp Insurance Claims

Senior level financial executives in a survey said the majority of employers believe their workers’ compensation and general liability claims will be unaffected by a looming recession.

The findings were the result of a poll of 255 financial executives conducted by Guideline, a national research firm, and sponsored by Wausau, Wis.-based Wausau Insurance for its fourth annual Multiline Productivity Poll.

The survey found that 62 percent of the executives feel a recession would create no significant change in workers’ comp claims and 64 percent believe their general liability claims would not change significantly.

Twenty-three percent said they believe workers’ comp claims would increase because of the recession, and 21 percent believe their general liability would rise.

On both questions, 6 percent said insurance claims would decrease and 9 percent said they did not know.

“At a time when media reports raise recession concerns, we believe most employers are maintaining a level-headed risk management outlook,” Susan Doyle, president and chief operating officer for Wausau Insurance, in a statement.

On the workers’ comp side, 71 percent of those surveyed employing 101-500 employees believe there would be no significant change in claims. However, the picture was a little different for larger companies with 5,001-plus employees where 37 percent said they would see no significant change, but 35 percent said they believe their claims would increase.

On the general liability side, broken down by number of employees, the vast majority of respondents—more than 68 percent—believe there would be no significant change in claims.

However, for companies with more than 5,001 employees, the respondents were evenly split at 37 percent saying either there would be no change or an increase in claims.

When asked what is the most important factor when weighing quotes for their property-casualty insurance, 48 percent said it was the total cost of risk while 52 percent said it was the direct cost. In 2007, the results were reversed with 52 percent saying total cost of risk was more important and 48 putting the emphasis on direct cost.

When it comes to being counseled by their agent or broker, 66 percent of the respondents said they are told to consider the total cost of risk in addition to the direct cost of the premium and deductibles for the p-c insurance. This is an increase from last year’s 61 percent.

On the issue of claims expense, 65 percent of the respondents said they save at least $2 or more in lost productivity expenses for every $1 saved by reducing claim expenses for workers compensation.

The findings were generally the same for general liability claims, commercial auto and commercial property where more than 50 percent of the respondents said a $1 reduction in claim expense resulted in savings of at least $2 or more. The findings were generally consistent with the previous two surveys.

The survey also indicates that in 2008 less companies were integrating multiple lines of insurance with one carrier than in 2007—60 percent in 2008 as opposed to 80 percent in 2007. However, most (75 percent) said they achieved significant productivity savings by integrating multiple lines, at least two lines.

Twenty-seven percent of respondents said workers’ comp paired with general liability and 33 percent of respondents said general liability paired with property insurance produced the most productivity savings. Workers’ comp and property insurance came in third with 21 percent of respondents saying the pairing produced the most savings.

Eighty percent of those surveyed said they would rather have one multiline underwriting team as opposed to 20 percent who said they preferred separate teams underwriting each line of business.