Travelers Group will not be renewing their workers? compensation policy with the borough of Nazareth, Pa. when it expires June 1 because of excessive claims. The town has had claims totaling approximately $1.1 million from 2009 to 2012.
Nazareth Mayor Fred Daugherty said 98% of the workers? comp claims during that time period came from police department personnel. But the city already had a history of too many claims, according to the mayor.
?Travelers was the only company that would provide us a workers? compensation policy,? he said. ?Our only option now is to go to the state fund, and we can?t even get a figure on that yet.? A spokesperson for Travelers declined to comment.
The mayor did not elaborate on what drove the spike in workers? comp claims.
Daugherty said he wants to put together a regional police force, using officers from his city and other nearby communities to regroup and reorganize the department to improve the management to the point where they can work their way out of their current predicament. ?This situation of excessive claims can be corrected and we can eventually get off the state fund,? he said. ?But we will have to go three years with virtually no claims. And that is a very difficult if not impossible feat to do.?
The town is not the only one in this predicament regarding workers? compensation. ?There are other towns all over that are in the same boat as us,? he said.
In October, A.M. Best released a special report on the workers? compensation market, saying it believed the line?s underwriting performance will continue to weaken before it improves because the number the factors that led to the deterioration in recent years ? including competitive pricing, rate decreases, high unemployment, decreased payrolls, rising medical costs and claims severity steadily trending upward ? all are expected to continue over the medium term (BestWeek, Oct. 10, 2011).
Travelers Group is one of the largest property casualty companies in the country, with more than 30,000 employees, 13,000 independent agents and 22 product lines across the personal, business, financial and international insurance segments. It currently has a Best?s Financial Strength Rating of A+ (Superior).
The top five insurance companies providing workers? compensation in Pennsylvania according to BestLink are Liberty Mutual Insurance, with a market share of 8.83%; State Workers? Insurance Fund, with 7.41%; American International Group, with 7.02%; Old Republic Insurance Group, with 6.19%; and Zurich Financial Services NA Group, with 5.97%.
(By David Hodes, associate editor, BestWeek: David. Hodes@ambest.com)
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