The U.S. workers’ compensation segment continued its positive performance in 2017, which was boosted by another year of growing payrolls that helped offset rate decreases and overall soft-market conditions, according to a new AM Best report. The Best’s Market Segment Report, “Workers’ Compensation Profitability Threatened by Rising Medical Costs, Payrolls and Legal Expenses,” states that the underwriting performance of the workers’ compensation segment in 2017 reflected the segment’s ongoing improvement over the past several years, with insurers reporting a 92.4 combined ratio, compared with 95.5 in the previous year. The report notes, however, that $6.6 billion in reserve releases translated to a 4.7-point improvement on the pure net loss ratio, a component of the combined ratio. Workers’ compensation insurers also recorded a 4.7% decline in direct premiums written in 2017 to $55.8 billion, attributable mainly to consistently declining rates.
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