Workers’ Comp Calendar Year Combined Ratio at 91; Accident Year CR 102

U.S. workers’ compensation net written premium decreased 0.2% in 2025, according to the National Council on Compensation Insurance (NCCI).

NCCI reported that while the calendar year 2025 combined ratio for workers’ compensation is 91 (compared with 86 the prior year), the workers’ comp accident year 2025 combined ratio is 102 with prior years continuing to experience downward reserve development.

The annual State of the Line Report analyzed U.S. private workers’ comp carrier data from the 38 states served by NCCI.

NCCI said that it’s the 12th consecutive year where the workers’ comp calendar year measured below 100, an indication of the line’s overall profitability. However, there are important differences to consider when gleaning the data, including state mix and industry mix as well as operational results, said Donna Glenn, chief actuary at NCCI, when releasing the results.

The last time the accident year combined ratio jumped above 100 was the “Covid” years, according to Glenn. She said the rise in 2025 accident year combined ratio is not surprising, adding that California, which accounts for 20% of the workers’ comp industry, reported a 2025 accident year combined ratio of 129. California has reported accident year combined ratios over 100 for the past five years, she said, and is influencing countrywide accident year combined ratios overall.

The NCCI report also revealed that lost-time claim frequency declined by 2% in 2025, a slower pace of decline than the long-term average decline. However, workers’ comp claim severity in 2025 grew with increases of 4% for both medical claim severity and indemnity claim severity.

“Frequency continues to decline, severity is nuanced but explainable, and industry and state mix matter,” Glenn said. Will there be a turn in frequency? Glenn says that NCCI does not see a turn in frequency occurring “systemically” and explained that there are unique reasons that are contributing to upticks in frequency in individual state results such as increases in tourism and hospitality.

She also noticed differences when looking at industry mix.

For example, the rate of frequency decline for the construction industry outpaces all of the other industries when reviewing lost-time claim frequency. That trend has held since 2015 and overall has seen a frequency decline of nearly 40%. However, healthcare remains a higher frequency industry, she said, noting that while healthcare has generally decreased overtime, the rate of frequency has ticked up over the last year. Glenn said this trend could be due to the uptick in employment over the past few years. “Newer employees with less experience generally have a higher incident rate,” she noted.

“There’s not a single number that defines the workers compensation system,” Glenn said. “Behind this year’s combined ratio of 91, factors such as industry mix, state differences, and carrier variation are all shaping results,” Glenn said.

Report highlights:

• The workers compensation (WC) combined ratio increased 5 points from 86% for CY 2024 to 91% for CY 2025. The change is due to increases in the loss and underwriting expense ratios.
• NCCI estimates a redundant industry reserve position of $14 billion. That’s a decrease from the $16B estimated redundancy in 2024. This is the second consecutive year with a slight reduction in the estimated redundancy.
• NCCI-serviced workers’ comp residual market share has been declining since 2014 and remains at about 5%
• 2025’s frequency decline is more moderate compared to the long-term average. This decrease is predominantly due to reduction in the number of claims.
• Indemnity severity grew at a similar rate to wages, and medical severity grew faster than the Workers Compensation Weighted Medical Price Index (WCWMI). For medical, price is only one part of the story, NCCI said. The other part is utilization. The variation in medical costs can be attributed to utilization and could signify the underlying claim mix is changing.

The State of the Line Report,State of the Line Guide, and State of the Line: At A Glance are available at ncci.com.

Topics
Workers’ Compensation