The performance of the workers compensation system remains strong according to the 2024 metrics that the National Council on Compensation Insurance (NCCI) just released.

Workers compensation premium decreased 3% in 2024. Private carriers produced their 11th consecutive year of underwriting profitability with a Calendar Year 2024 combined ratio of 86. It is the 8th consecutive year with a combined ratio below 90 for the workers compensation insurance market.

“Workers compensation is a product where compassion and analytics work hand-in- hand – protecting and caring for employees while also leveraging data to make the entire system more effective and sustainable,” said NCCI President and CEO Tracy Ryan.

NCCI’s State of the Line Report and the State of the Line Guide include key insights:

– – Workers compensation net written premium decreased 3% in 2024. There are two contributing factors: payroll and rate on payroll, mostly represented by the loss cost. Payroll growth is slowing, reverting back to the long-term average. Loss costs continue to decline, but more moderately.
– – The Calendar Year 2024 combined ratio for workers compensation is 86%, a sign of underwriting strength for the system. Workers compensation (WC) has one of the lowest combined ratios among property/casualty. In fact, 2024 was the 8th consecutive year with a combined ratio under 90% and the 11th consecutive year of underwriting gains.
– – Workers compensation’s Accident Year 2024 combined ratio is 99% with prior years continuing to experience downward reserve development.
– – NCCI estimates a redundant industry reserve position of $16 billion. That’s a decrease from the $18B estimated redundancy in 2023. While still a strong financial position, this is the first year with a slight reduction in the estimated redundancy.
– – Lost-time claim frequency declined by 5% in 2024. The latest year’s frequency decline outpaces the long-term average, although not to the extent of the prior year. More than half of this decrease is due to the reduction in number of claims.
– – Severity grew in 2024 with increases of 6% for medical claim severity and 6% for indemnity claim severity. Indemnity severity grew faster than 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. The other part is utilization, and this year utilization contributes to a majority of the increase.

“The workers compensation system continues an era of exceptional performance with strong results and a financially healthy line,” said Donna Glenn, FCAS, MAAA, Chief Actuary, NCCI. “And while there are early indications of potential headwinds on the horizon, the industry is positioned well to navigate these challenges.”