"The entire industry is starting to trend closer to flat," according to Stephen Hackenburg, chief broking officer of the national casualty practice at Aon Risk Solutions in New York.
"The first quarter was more of a stabilization period, and the second quarter has been more of a return to softer market conditions," he said. "We're starting to see rates trend down (around 2.5%), and we're starting to see the return of fairly meaningful rate reductions on the right accounts."
Rate Increases Vary By Company Size
Employers with high-risk profiles are seeing premium increases as high as 10%.
However, those rate increases are still lower than they were last year at this time.
Analysts at Moody's Investors Services Inc. said that the rates are expected to remain "sufficiently above loss-ratio inflation (about 2%) to generate further margin expansion and achieve an underwriting profit in the year."
The same analysts said that workers compensation insurers will see profitability in 2014.
"Demand is picking up because the economy is getting better and supply has never been higher," Hackenburg said. "When you combine that with the (fact that) insurance companies are performing pretty well - their profitability and return on equity has been improving - that's a pretty good recipe for increased competition and improved pricing for insurance buyers."
The reason that mid-level employers are seeing higher premiums is because they're purchasing guaranteed-cost coverage with little to no self-insured retentions. Those retentions are frequently used by large employers.
The Federal Terrorism Insurance Backstop
Although members of Congress have introduced legislation to renew the backstop, the possibility that it might expire has led "some insurers to build sunset clauses into policies," according to Carolyn Snow, director of risk management at Humana Inc. and president of the Risk & Insurance Management Society Inc.
"We've only seen [the possibility of non-renewal] materially impact a few dozen accounts on our books," Hackenburg said. "It's hard to label it as an industry-changing event. It's certainly very material if you're a very large financial institution in lower Manhattan. It's a very big deal for them, but for the majority of our clients, it hasn't been."
Hackenburg also noted that some companies are implementing wellness programs to help reduce workers compensation insurance premiums.