Insurers Report Record 2003 Profits: Pocket millions while pushing to cut injured workers’ benefits

 Insurance companies are reporting that 2003 was the fattest year on record, while they push to cut meager benefits to injured workers. Many of the insurers writing worker’s compensation policies in California reported “record net income and underwriting income in 2003,” figures in line with other companies’ banner profits.

 
“The very companies enjoying huge profits from the huge rate increases imposed on businesses are calling for more cuts in medical benefits to injured workers,” said Art Azevedo, president of the California Applicants’ Attorneys Association (CAAA). “Insurance company earnings soared in 2003 – even before the major new reforms took effect this year – as insurers profited from huge rate increases. The workers’ compensation problem is an insurance problem, and that’s where the billions in savings are to be found. We urge Governor Schwarzenegger and the Legislature to ‘follow the money’ when looking to bring the system under control. Now is no time to protect insurance company mega-profits by hurting injured workers.” Azevedo added, “No matter how deeply we cut benefits and medical care for injured workers, there will be no definite employer savings unless the industry is regulated. There is no requirement that insurers pass on savings.”
 
Everest Re Group: net income increased 84.2%, rising from $231.3 million in 2002 to $426 million in 2003.
 
Travelers Property Casualty Corp: record 4th quarter net income of $488.7 million in 2003. For the full year, the net income was $1.696 billion. The 2003 underwriting gain more than doubled to $865.7 million from $317.1 million in 2002.
 
St. Paul Companies: Net income for 2003 increased 203% to $661 million from $218 million in 2002.
 
Hartford Financial Services Group, Inc: 4th quarter net income increased 76% to $454 million, up from $258 million in 2002.
 
Zenith National Insurance Corp: record net income and underwriting income in 2003, with net income in 2003 up 550% from $10.2 million to $67 million.
 
Chubb Corporation: net income was up 28% in the 4th quarter, increasing from $56.6 million in 2002 to $72.3 million in 2003. The results for 2003 show a 260% increase in net income, rising to $808.8 million from $222.9 million in 2002.
 
Fairfax Financial Holdings, Ltd: reported the largest annual profit in its history, a net income of $271.1 million in 2003. The combined ratio dropped from 101.5% to 97.6% in 2003.
 
ACE Ltd: record net income of $1.4 billion in 2003, more than 18 times the $77 million net income of 2002. Net income in the 4th quarter of 2003 was $421 million compared to a net loss of $494 million in 2002 (which included a reserve change of $354 million for asbestos).
 
The Governor’s proposals would:
 
Eliminate an injured worker’s right to select or change doctors.
Limit medical treatment to HMO contractual standards.
Deprive both parties the right to an expeditious trial on medical issues
Create a cumbersome and costly bureaucratic medical review process.
Impose fault in this “no fault” system.
Drastically restrict an injured worker’s compensation for lifetime disabilities.
Disregard chronic pain when evaluating a worker’s disability.
Wipe out an injured worker’s civil remedies for discrimination and retaliation.
Drastically reduce penalties for unreasonable delay or denial of benefits.
Deny the right to counsel to workers in alternative dispute resolution programs.
Repeal a new safety program before it even gets started.
Provide illusory benefit increases.
 
Graph of Combined Ratios:
http://www.caaa.org/research/Industry_combined_ratio_graph.pdf
 
Source:
http://www.caaa.org/