SIF's Combined Ratio Up in Sign of Times for Industry, S&P Reports

Thursday, July 23, 2020 | 0

The New York State Insurance Fund, the largest writer of workers' compensation in the state, saw earned premiums drop significantly during the pandemic, driving up its second-quarter combined ratio sharply.

The trend “is likely to be replicated across the industry to varying degrees at a time carriers face multiple impediments to premium growth,” Standard & Poor's financial ratings company reported this week.

The SIF, the insurer of last resort, had a combined ratio of almost 131%, compared with 111% for the second quarter of 2019, according to the report.

The combined ratio is considered a measure of profitability. The lower it is, the more profitable the company.

Net premiums for SIF fell by 27% in the second quarter to about $379 million. Losses and loss adjustment expenses marked a decline of 15%. Underwriting expenses fell 4.5% to $42 million.

Written premiums shrank almost 30% from the second quarter of 2019.

A reduction in payroll reported by policyholders, the reclassification of employees to less risky classifications, and nonpayment of premium all contributed to the drop in net premium, SIF CEO Eric Madoff said in a recent board meeting.

Madoff said the decline in premiums in a few classifications was notable, including contracting, down 36%, and restaurants and hotels, down 63%.

A webcast of the meeting can be seen here.