The National Council on Compensation Insurance (NCCI) highlighted its State of the Line Report, providing a detailed review of the workers compensation insurance sector.
According to the report, net written premium for private carriers in CY 2024 declined by 3.2% from the previous year, totaling $41.6 billion. The combined ratio for the year was 86.1%, and the operating gain reached 23.7%.
Updated estimates for NCCI states indicate that Accident Year (AY) 2024 claim frequency is expected to be 6% lower than in 2023, a larger decline than the initial –5% estimate. Indemnity claim severity for AY 2024 is projected to be 5% higher than the prior year, slightly below the original +6% estimate, while medical lost-time claim severity is estimated to increase by 6%.
Preliminary analysis for private carriers through the second quarter of 2025 shows direct written premium decreased by 1.9% compared to the first half of 2024. The direct loss ratio for CY 2025 stands at 50%, two points higher than the same period last year. Despite these changes, the line is expected to maintain underwriting gains and net premium volume similar to 2024.
The workers compensation sector’s performance in 2023 set the stage for these recent trends. That year, net written premium for private carriers reached $43 billion, marking a 1.1% increase from 2022.
The combined ratio for 2023 was 85.9%, which was the seventh consecutive year the ratio remained under 90%. This period also reflected a 14.1% underwriting gain, underscoring the sector’s ongoing profitability and resilience.
The report notes that both indemnity and medical severity are rising faster than their respective price proxies. Indemnity severity is outpacing wage growth, and medical severity is increasing more rapidly than the Workers Compensation Weighted Medical Price Index. Utilization, rather than price alone, is a significant factor in the medical severity increase this year.
Broader industry analysis suggests the US property/casualty insurance sector is expected to outpace the national economy in 2025, with workers compensation remaining the strongest-performing line.
Combined ratios for workers compensation are projected to range from 85% to 93%, reflecting continued underwriting discipline and favorable claims experience.
Claim frequency continues its long-term downward trend, with the most recent year’s decline surpassing the long-term average, though not as sharply as in the previous year. More than half of the frequency reduction is attributed to a lower number of claims.
NCCI’s chief actuary has previously indicated that if current estimates hold, 2025 will mark the twelfth consecutive year of combined ratios under 100 for private carriers in workers compensation.
NCCI estimates the industry’s redundant reserve position at $16 billion, down from $18 billion in 2023. While this remains a strong financial position, it is the first year with a slight reduction in estimated redundancy. The overall outlook for the workers compensation industry in 2025 remains stable, with continued strong performance expected.
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