Profitability analysis of statutory workers' compensation insurance in 2003–2012: very high profitability and return
The financial results of statutory workers' compensation insurance have been analysed from three perspectives: premium setting, business profitability and return on capital in the insurance business.
From the premium-setting perspective, the adjusted underwriting result deteriorated somewhat from the preceeding year. This is due to a lower interest rate compared to 2011 and a low risk-free return on net technical provisions. In 2012, the result relative to premiums written was 12%, which is a little below the average (13%) for the review period. The level of premiums collected can therefore be considered prudent.
From the profitability perspective 2012 was the best year of the review period: high fair value return and increased premiums made the underwriting business profitable. The underwriting result relative to premiums collected was 38%, compared to a 10-year average of about 10%.
The return on capital employed in the statutory workers' compensation insurance business was also very high. In 2012 the return was 39%, whereas the average for the whole 10-year review period was 15%.
The premiums written in the statutory workers' compensation insurance business increased by 6% compared to the preceeding year. In 2012, premiums written before decuction of credit losses amounted to EUR 621 million.
In 2012, there were 12 Finnish insurance companies and one branch of an insurance company from an EEA country pursuing statutory workers' compensation insurance business in Finland. However, the market was highly concentrated: the four largest insurance companies accounted for about 84% of the total business.
FIN-FSA's annual analysis
The Financial Supervisory Authority (FIN-FSA) publishes an analysis of the profitability of statutory workers' compensation insurance once a year. In addition to data on the total business, the analysis also includes company-specific figures. The analysis presents information on insurance premiums, companies' market shares and results, and the combined expense ratio.
The analysis is supplemented by statutory workers' compensation insurance statistics and a separate Excel table containing a summary of data collected on Finnish insurance companies.
For more information, please contact
- Pirkko Welin-Siikaluoma, Chief Actuary, tel. +358 10 831 5533