Some workers compensation risks seem too difficult to cover. Excess loss rates are unpredictable, on the rise and difficult to analyze with the conventional tools. And, reinsurance may not be available at some layers. A carrier that can find ways to write business for these groups, however, can identify a revenue opportunity ahead of its competitors. Together, reliable modeling and disciplined underwriting can open new markets in a mature industry in which peers tend to look for merely incremental advantages. Using Guy Carpenter’s Reveal® v1.1 excess loss model, now available through the i-aXs® platform, workers compensation carriers can identify the drivers of severity at the class code level, making it possible to develop a plan for protecting capital and profitability.
1. Find what nobody wants: many workers compensation writers skip certain industries and classes. Instead, dig into these underserved sectors to see if you can write policies profitably over adequate retentions for an adequate premium.
2. Know where the boundaries are: even with disciplined underwriting, some risks will remain unmanageable. Balance the pursuit of market share and earnings with a healthy respect for capital preservation.
3. Maintain underwriting discipline: returns will result strictly from your ability to manage your portfolio and model alternatives to identify potentially profitable opportunities. Select your risks carefully and only after a rigorous analysis beyond hazard group and specific to the actual Workers Compensation class code.
4. Deploy your capital and resources (wisely): take action based on your workers compensation modeling efforts in Reveal. Put your capital to work to attain clear financial objectives using a defined strategy.
5. Monitor your portfolio: review the results regularly to ensure that your assumptions are sound and the business written remains profitable. Make changes when necessary to protect your balance sheet and drive returns.
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