News and Events
No cute mascots in workers’ comp...
but you gotta have it
New Mexico Business Weekly - by Amanda C. Kooser Special to NMBW
Workers’ compensation insurance doesn’t have ducks or geckos to sell it, but it has a tremendous impact on companies across New Mexico.It is a necessary part of doing business in the state.“Under most circumstances, it is mandatory for employers with more than three employees or who have a construction industries license to have workers’ compensation insurance,” says Van Cravens, public information officer for the New Mexico Workers’ Compensation Administration.
Looking beyond the mandate, workers’ compensation also protects businesses when an employee is hurt.“People will get sick and injured on the job. It limits your liability so it won’t drive you out of business,” Becker says.Jeffrey Vinyard, president of water distribution company Crystal Springs Bottled Water and Southwest Water Conditioning, a Culligan dealer in Albuquerque, has 60 employees between his two companies at any given time, about 30 of whom are drivers.He is well aware of the importance of workers’ compensation insurance.“If we weren’t mandated by law to have it, we would have it anyway, because it’s an indirect benefit to the employee. You want to protect yourself and protect your company against the catastrophic occurrence,” he says. Vinyard estimates that up to half of his insurance budget goes to workers’ comp.
Buyer’s market for workers’ comp gives employers a break on rates
New Mexico Business Weekly - by Amanda C. Kooser Special to NMBW Crystal Springs Bottled Water production staffers Donaldvan Bitah, foreground, and Anthony Stout work in a company warehouse. Crystal Springs President Jeffrey Vinyard recently landed lower rates on workers’ compensation insurance policies in a competitive market for insurers. Jeffrey Vinyard went shopping recently.Vinyard, the president of water distribution company Crystal Springs Bottled Water and Southwest Water Conditioning, a Culligan dealer in Albuquerque, came back with new workers’ compensation insurance policies from New Mexico Mutual that started at the beginning of the year.“They offered a better deal than what we were getting elsewhere. In today’s economy, everybody is looking to save money wherever they can,” Vinyard says. He estimates that he is saving 5 to 10 percent compared with his previous policy.The push for cost savings, combined with falling rates in New Mexico, has created an extremely competitive environment for workers’ comp insurance carriers. Safer workplaces have led to state-mandated lower rates. Insurers are battling for price-sensitive customers. Closures and layoffs have a direct impact on the amount of premiums that insurers can collect. The whole cocktail of factors means insurers are caught in a delicate balancing act of holding premium rates down while keeping their own companies afloat.
New Mexico Mutual commands a nearly 30 percent market share for workers’ comp in the state. President and CEO Norm Becker says competition for that business is intense.“It’s a high-premium and high-cash product. Big companies are looking for cash revenue, and it’s an easy one to tap into,” he says.Layoffs and business closures have taken a bite out of premiums.“It’s affected our top line the most. We have a lot of businesses in construction and oil and gas. Those industries have been hit really hard by the recession. The revenue we are seeing from those is greatly diminished,” Becker says.The result has been a 7.5 percent drop in invoiced premiums between 2008 and 2009, he says.New Mexico Mutual isn’t the only insurer that is feeling the squeeze.“We’re down over a third, and some months, approaching 50 percent down in hours worked and therefore premiums,” says Jack Milarch, CEO of contractor insurer Builders Trust and the New Mexico Home Builders Association.Builders Trust brought in $19 million in premiums in 2008, and expects final 2009 numbers to be down by about a third.“We’re all aware that the construction industry is boom and bust. Luckily for us, we have reserves. We’ve set the company up to carry through times like these. Doesn’t mean it’s easy, though,” he says.
Safety keeps costs down
While workers’ compensation rates have risen in many states, New Mexico has been on an extended downward trend for the past four years. The state mandated that rates be lowered 4.5 percent for 2010.“The rates have been falling, falling, falling because accidents are down,” Milarch says.He attributes that to increased attention to safety and the layoffs of less-experienced workers in the construction industry during the recession.For individual companies, safety and claims history are key components in determining rates.“Employers are managing their risk a lot better. The way to reduce your rates is through safety programs and safety awareness,” Becker says.Vinyard’s companies have monthly safety meetings, extensive employee training and a safety bonus program. A.M. Best Announces New Company Ratings OLDWICK, N.J., JANUARY 15, 2010
A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and issuer credit ratings of "a-" to New Mexico Assurance Company (NMAC), New Mexico Employers Assurance Company (NMEAC) and New Mexico Premier Insurance Company (NMPIC), following the recent state approval of a 100% quota share agreement between NMAC, NMEAC, NMPIC and their parent, New Mexico Mutual Casualty Company (NMMCC). The outlook assigned to all ratings is stable, and all companies are domiciled in Albuquerque, NM.
The ratings of NMMCC and its other subsidiaries were affirmed in March 2009 based on the consolidated group's solid capitalization, historically strong operating performance and its dominant market position in the New Mexico workers' compensation market, where it is able to maintain a strong policyholder retention rate.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.
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