Workers’ compensation continues to be the outlier line of business in a volatile property and casualty market. While other lines have struggled with loss creep, rate inadequacy, and capital constraints, workers’ compensation has quietly maintained its position as one of the most stable and profitable segments of the market.
The latest data from the National Council on Compensation Insurance (NCCI) confirms what many industry professionals have already sensed: workers’ compensation remains solid, but not static. Trends are evolving, and agents should be paying close attention to what’s brewing beneath the surface. As client operations shift, labor markets fluctuate, and claims behavior continues to change, there’s an opportunity to bring sharper insight to the table and be the partner your clients rely on to get ahead of risk.
Let’s break down workers’ compensation trends from NCCI’s most recent State of the Line presentation, so your client conversations can be further strengthened.
A Long-Running Streak of Profitability, But For How Long?
One of the headline stats from this year’s update: the workers’ compensation combined ratio for 2024 came in at 86%. That’s the eighth consecutive year below 90% and the eleventh year in a row with positive underwriting results. In other words, this is a line that continues to outperform, and it has done so longer than any other in the P&C space.
That said, we’re starting to see subtle signs of change. The loss ratio dropped by 3.2% this year, but the drivers behind that number are evolving. Utilization is up, medical severity is increasing, and economic volatility continues to hover in the background.
What this means for you: This is a window of opportunity. With profitability still high, many markets remain competitive, but that may not last forever. Now’s the time to help clients secure the best carrier partner, reinforce strong safety protocols, and ensure their programs are properly structured.
Premiums are Slipping (and That’s Not Always a Good Thing)
Total net written premium from private carriers dropped to $41.6 billion, a 5% decline from the year prior. While that might sound like good news for buyers, the underlying causes matter. This dip was largely due to a slowdown in payroll growth and continued declines in loss costs. In short, there’s less premium being collected, and not necessarily because of risk improvements.
What this means for you: Lower premiums can be misleading. They don’t always reflect lower risk, and in some cases, they may lead businesses to scale back or underreport exposures. This is a good time to revisit classifications, audit prep, and make sure policies reflect payroll realities on the ground.
Red Flag Warning: Severity Is Outpacing the Economy
Both indemnity and medical severity rose significantly in 2024, by 6% and 6.1% respectively. That’s faster than wage growth (4.2%) and notably higher than the 2.8% uptick in the Workers’ Compensation Weighted Medical Price Index (WCWMI). The key factor here isn’t necessarily the cost per service, but rather the amount of care being used. Utilization is now the primary driver of rising medical costs in comp claims.
What this means for you: This is where program structure and claims management matter most. Encourage clients to think beyond pricing and focus on protocols that help employees recover faster, like return-to-work programs, nurse triage, or even just better communication with injured workers. Every additional day on a claim adds up.
Claim Frequency Continues Its Downward Slide
If you’ve noticed fewer claims coming in across your book, you’re not imagining things. Claim frequency declined by another 6% last year, continuing a long-term trend. More than half of that drop is attributed to a decrease in the total number of claims filed, a reflection, in part, of shifts in workforce makeup, hybrid work arrangements, and automation.
What this means for you: Lower frequency is a good thing, but it can also breed complacency. Clients may start cutting corners on safety or skimping on training. Reinforce that risk still exists, and that a single high-severity claim can offset years of good experience.
A Small Dip in Reserves, But No Need to Panic
NCCI now estimates a $16 billion redundant reserve position for the industry, down from $18 billion the year before. That’s still a very strong position overall, but it does represent the first year-over-year decrease in some time.
What this means for you: This is an ideal opportunity to discuss carrier stability and long-term partnership with your clients. A healthy reserve environment provides a cushion, but as that cushion shrinks, the need for experienced claims handling and risk mitigation becomes even more critical.
Keep One Eye on the Economy
Perhaps the biggest wildcard moving forward is the economy itself. Workers’ compensation is closely tied to employment and payroll trends, so any disruption in the labor market, wage inflation, or broader economic indicators can quickly impact exposure bases and risk profiles.
We’re Here When the Market Moves
At Jencap, we track industry trends and help you make sense of it. Our team of workers’ compensation brokers understands how to read the market, anticipate shifts, and craft programs that perform across cycles. Whether you’re facing a tough class code, a client with a soaring experience mod, or just need a second opinion, we’re here to add value and deliver solutions.
Looking for clarity in today’s workers’ compensation market? Let’s talk.
