Most every staffing company owner thinks about this question at least one time a year — which is usually at renewal time.
NCCI answers this question in a recent report that they published. Here is a link to this report
The Report lists these 5 key drivers:
- Cash flow underwriting in pursuit of investment gains is more of a driver of the underwriting cycle than excess capacity.
- As investment gain opportunities deteriorate, disciplined profitable underwriting results materialize.
- As interest rates decrease, hard markets follow. As interest rates increase, soft markets follow.
- Underwriting results are the key driver of the direction of return on surplus.
While a companies loss history is still important in evaluating each companies rates, the overall investment environment may be equally or more important. According to the NCCI report, with interest rates still very low, the carriers are still not receiving sufficient income from their market investments, causing them to depend on higher rates/ income from their policy holders.
This probably means that higher work comp rates are here to stay for a few more years, given that the current inflation indicators are pointing to low interest rates.
This also means that staffing companies will have to shop extra hard to get the best rates possible. They should also prepare for more rate increases over the next few years. If you are shopping for workers compensation, please contact me at david@StaffingCompSolutions.com and visit us at www.StaffingCompSolutions.com
All the best
David Schek
President
StaffingCompSolutions.com
American Staffing Association Member
ASA Exhibitor for Annual 2014 Conference
California Staffing Association Member