The State of Work Comp

The joyride continues!

NCCI's 2025 State of the Line says...

• WC premium dropped 3.2 percent - while all P&C insurance lines saw an increase of almost 9 percent…

  • WC bureau-approved rates are projected to drop another 6.1% this year

• WC remains hugely profitable with a combined ratio of 86%

• Lower frequency - using premium dollars as the benchmark - dropped again - down 7.6% in 2023 and another 5% in 2024.

  

• But…claim costs i.e. “severity” increased significantly significantly…

  • up 6% for indemnity claims

• That 6% jump was driven primarily by higher wage replacement/indemnity spend - NOT medical inflation.

• WC remains the darling of the industry; with investment income averaging 10 percent on top of an underwriting margin of 14% WC’s pretax operating gain is 24%…

24%

• Reserves are still WAY too high - the industry is siting on $16 billion in excess reserves.

There’s a lot more to unpack - the slide deck is here - here are the key takeaways.

1. WC is still way too expensive; declining frequency, flat medical inflation and gigantic excess reserves clearly indicate insurers are making bank on WC.

2. Medical inflation remains quite low - at least projections indicate inflation was almost flat in 2024.

What does this mean for you?

All joyrides eventually end.