Excess Capacity To Impact Workers' Comp Outlook
A recurring theme in workers' comp for at least the last three years is the recognition that the market has a great deal of excess capacity.
Most analysts estimate excess capacity to be somewhere in the neighborhood of $50 billion-to-$100 billion. If you take out $20 billion for reserve deficiencies, youre left with approximately $30 billion-to-$80 billion in surplus.
A.M. Best in Oldwick, N.J., has also forecast that about one-third of p-c companies will fail or be consolidated by the end of 2003. Interestingly, the bottom quarter of providers represent some $70 billion in surplus–meaning that this group represents roughly the same amount of excess capacity that exists in the market.
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