Workers' compensation rates in 2018 will be mixed, with some programs seeing pricing flat to down and others seeing spikes, according to a market prediction from the broker USI.

In other words, market trends should continue as they did in 2017, according to the USI report.

"In 2017, we saw a continued downward trend in workers' compensation, including a reduction in premium rates overall, particularly in the loss-sensitive marketplace. Given the lack of deterioration in many larger carriers' combined loss ratios, we expect similar aggressive targeting to grow market share in 2018," the USI report predicted.

USI said that returns for low-risk investment opportunities are still limited. On the one hand, there is both aggressive and prudent pricing coming from carriers seeking to grow premium. On the other, clients with "poor loss results, declining financials" and businesses in states such as Florida, California and New York are facing underwriting discipline (as are insureds in more volatile industry classes).

For 2018, USI predicts pricing will stem from a desire to maintain or increase market share, with a goal of profitable market share driving those strategies.

Other USI predictions for workers' compensation:

  • Loss-sensitive programs will either see flat rates or hikes as high as 5 percent, assuming clients have clean or improving loss experience. For those that are seeing worsening loss experience, rates in this category will increase more than 5 percent, and carriers will likely adjust their retention levels.
  • For guaranteed-cost programs, USI sees rates ranging between 10 percent decreases to 10 percent jumps. Clients with very clean loss experience would escape changes, and pricing would also vary due to a client's "specific state payroll distribution due to states' legislative pressure on adequacy of rates," according to the report.
  • Medical cost inflation is expected to rise 6 percent year-over-year, and this upward trend will continue to affect workers' compensation and loss liability totals.
  • The industry can expect more increases in cost shifting from healthcare plans to workers' compensation, due in part to problems with the Affordable Care Act.
  • While self-insurance remains an alternative to insured workers' compensation, USI says some states are becoming more conservative on their collateral position for many qualified self-insureds and more employers are "looking more closely at their existing self-insured status because of onerous associated administrative costs."

USI's full report is the 2018 USI Insurance Market Outlook report. The report also forecast trends in commercial market areas including property, general liability, umbrella liability, international, environmental, aviation, crime, cyber, medical malpractice; and kidnap, ransom and extortion.