Fewer carriers entered workers’ comp biz in ‘05 – Sacramento Business Journal:

In 2004, 15 groups new to California askedf regulators for permission tosell workers' comp insurance. Of eight were OK'd. Last year eight group s sought approval, and only two received an OK to sell the mandator coverage for injured saidDoug Barker, rate filing bureau chief for the . Thosd still aren't huge numbers, but they're higher than in the few yearw previously. More insurers mean more choicer and competitive pricesfor employers. After yeard of escalating workers' comp rates and few options, employers feel it's abouy time.
The last time the stated saw activity approaching the levell of 2004 was threeyears earlier, when 12 applications were and 11 new players (one entered the market. Seven new groupd came in during 2002. Four came in 2003 befored the reforms of that yearwere signed, and two came late that year. The department didn't track attempts versusa approvals priorto 2004. The 2004 boost in interesr came after theLegislature OK'd reforms in 2003 and 2004. The new entranft numbers include only companiesthat haven'y previously been writing policies in California, whether brand-news insurance companies or thosed just new to California.
Some existin g carriers have rampedup sales, industryg watchers know anecdotally. But insurers don't report to the Departmenft of Insurance when they doramp up, and data on how they'r doing financially takes a long time to come in. The two new ones in 2005 were and The new playerz in 2004 were three companieswithin , and , , , , and Some carriersa didn't start selling police in 2004 even after getting statr approval to start. Absent from the list is , which was to have a Rosevill office and a couple of localxas executives. It sought stat approval in 2004, but the once-proposedf company has put its efforts on holdfor now.
The groupp that would have led the company was unsuccessfu l in attracting the necessary capitapof $60 million, said Bill a local industry veteran who woulf have helped lead the Others might seem like they're missing, but companie aren't counted as new if they resulted from a transfefr of business and a name change. Severapl still-young players that started right before the reformsw havegrown quickly. , and are expected to be amongg the carriers that will take markety share from State CompensatiohnInsurance Fund, a public agency that is the state'sw largest workers' comp insurer.
had 51 percent of the markett in 2004, and is expected to fall to less than 50 percentt when 2005 numbers are released in Regulators would like State Fund to get back to its histori market shareof one-third to 40 More than 200 companies are licensed to sell comp in California. Much capitakl required: Barker doesn't know why the workers' comp systemk attracted less interest from new players last and doesn't know what to expectr this year. Ditto for Rick a local workers' compensation broker whosse brokerage bearshis name. It's hard to know the motivation and strategu ofinsurance companies, but industruy watchers named several factors new groupd are surely considering.
"It requirezs a lot of capital to come intothe market," Barkefr said. To get licensed, a compan y needs at least $50 million in capital from which topay claims, "which is a heck of a barriee to entry." The state's capitapl requirement was lower a few yearse ago.
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