If you’ve been hearing that the
workers’ compensation insurance market is “soft”, you might be wondering—what does that actually mean for your business? And more importantly, how can you take advantage of it?
In this article, we’ll break down what a soft workers' comp market is, why rates are lower, and how your business can strategically use this market shift to your advantage.
What Does a Soft Insurance Market Mean?
In the insurance world, a “soft market” means that insurance companies are offering lower premiums, more coverage options, and competitive pricing due to favorable market conditions.
Right now,
workers compensation insurance is one of the softest markets in commercial insurance, especially when compared to other lines of coverage like:
- General liability
- Commercial auto
- Umbrella liability
- Commercial property insurance
Why is workers compensation in a soft market while other policies are seeing rising costs? The answer lies in
profitability.
Why Are Workers’ Comp Rates Lower Right Now?
Insurance companies determine rates based on risk and claims history. Over the past few years, workers compensation insurers have been more profitable than other types of commercial insurance.
A major reason for this? The lasting effects of the Covid-19 pandemic. During Covid-19, businesses closed, shifted to remote work, and reduced overall workplace exposure. Fewer people on-site meant
fewer injuries and workers comp claims.
Because of this, insurance carriers were able to
hold onto more premium dollars and boost their profitability.
The result?
Lower workers’ compensation rates across the country. In fact, an
S&P Global analysis found that 36 states saw reduced workers' comp rates in the first quarter of 2023.
How Can Your Business Benefit from the Soft Workers Comp Market?
If you’re a business owner, now is the time to take advantage of these favorable conditions. Here are
three ways to make the most of the soft workers' comp market in 2024:
1. Don’t Get Complacent – Maintain Your Safety Programs
Just because rates are lower today doesn’t mean they’ll stay that way forever. The best way to ensure long-term savings is to keep your workplace safety programs in place and continue managing risks effectively. Having a strong return-to-work program can also help control costs and keep your claims history low.
2. Use Workers’ Comp to Negotiate Better Rates on Other Policies
If your business spends a significant amount on workers’ compensation insurance, you can use that to leverage better pricing for more challenging coverage lines—such as general liability, commercial auto, and umbrella liability. Insurance carriers are more willing to compete for your business when they see a well-managed workers’ comp program.
3. Shop Your Insurance & Take Advantage of Rate Reductions
If you haven’t been out to market in the past few years, now might be the perfect time to explore your options. Many businesses are seeing significant rate reductions, and locking in lower premiums now can help you save money for years to come.
Now Is the Time to Act
With workers’ compensation rates at historic lows, businesses have a unique opportunity to reduce costs and improve their overall insurance program. But the soft market won’t last forever—so taking action now can help you maximize your savings and strengthen your risk management strategy.
Need Help Reviewing Your Workers’ Comp Policy?
If you want to see how your business can take advantage of lower workers' comp rates and improve your overall insurance program, reach out today for a free consultation. We’ll help you explore your options and make sure you’re getting the best coverage at the best price.
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Contact us today to get started!
