DePaolo on the 2015 NCCI Issues Symposium

Dave DePaolo from WorkCompCentral is in Orlando for the Annual NCCI Issues Symposium and he’s worried about the impact of low interest rates on industry profit margins.

There are several factors that come into play, but the most important factor is a continuing trend of low interest rates, which the actuaries and economists at NCCI don’t see rising anytime soon despite what the Federal Reserve says.

These low interest rates mean that the insurance industry, which invests largely in conservative vehicles such as Treasury bonds, won’t reap the same profit margins from investments as they had with previous investments that are now maturing.

The money has to come from somewhere to keep investors happy, so the only other income avenue – selling the product – needs price increases.

Read the whole thing.