NCPA - National Center for Policy Analysis

Workers' Compensation Coverage More Expensive

July 22, 2002

Chalk it up as another economic dislocation generated by the attacks of Sept. 11: businesses in New York, Washington and other large cities are finding it increasingly difficult to obtain workers' compensation insurance for their employees, as insurance companies more closely monitor their accumulation of risk exposure in urban areas.

  • While insurers hadn't given much thought regarding risks built up in certain areas prior to Sept. 11, that changed as the industry was hit with an estimated $50 billion in claims from the attacks.
  • One way insurers have responded to such losses is by excluding terrorism coverage from their policies in many states.
  • But no state allows such exclusions for workers' comp coverage.
  • Some comp insurers have reached their risk limits in certain areas and are gradually reducing their exposure levels.

Premiums in nearly all insurance lines have increased by an average 10 percent to 50 percent, according to a survey by the Council of Insurance Agents and Brokers.

One of the hardest hit areas is New York's financial district.

Source: Christopher Oster, "Workers' Comp Insurers Shy from Business in Big Cities," Wall Street Journal, July 22, 2002.


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