Strong Workers' Compensation Market Sets the Stage for 2026

The insurance market has not been kind to most commercial insurance buyers over the last five years, with auto and umbrella coverages leading the charge in rate increases. The one line of coverage brokers and clients have counted on to help offset premium increases has been workers’ compensation. 

Workers’ compensation has been profitable for most insurance carriers, with the net combined loss ratio for 2023 and 2024 at 86%. A combined ratio below 100% indicates that the company is making a profit, while a ratio above 100% suggests the company is paying out more in claims and expenses than it is receiving in premiums.

Why workers’ compensation remains profitable

A few factors have led to continued improvement for workers’ compensation lines. 

According to NCCI, we have seen annual payroll growth every year since 2000 outside of three major economic events that happened during that time frame (the Dot-Com Bubble in 2001, the Great Financial Crisis in 2008-09, and COVID-19 in 2020).  

Additionally, many employers have adopted more robust return-to-work programs, helping injured employees re-enter the workforce faster and reducing time-loss claims. This has helped the lost-time claim frequency continue to decrease over the last 10 years.

What also helps is that lost-time severity has not seen a big spike while it’s been slowly increasing over the last 10 years. When you compare this to the large legal verdicts associated with general liability and automobile claims, it helps drive home why insurance carriers are excited to write this coverage.

How employers can keep costs down

Because we expect 2025 to be another profitable year for workers’ comp carriers, we don’t anticipate rate increases for clients in most states in 2026. That said, some states, such as California and Washington, have filed for rate increases due to loss activity. 

Even with the positive renewal outlook, there are things you can focus on to help your company keep premiums as low as possible. 

• Audit open claims: Work with your insurance company and broker to resolve lingering cases to help get them closed and paid.
• Maintain a good relationship with employees: Make sure employees feel valued and that the company will do everything possible to help them get back to work as soon as possible if they experience an injury.
• Strengthen safety protocols: Invest in employee training and equipment to reduce workplace injuries.
• Enhance return-to-work strategies: Offer injured employees transitional roles and modified duties to reduce time-loss costs. This keeps your claim dollars low, and there is a big benefit to your workers’ compensation experience mod, helping keep your claims medical-only. Only 30% of the amount will show up in the experience mod calculation if the claim is medical only.
• Engage with your broker or carrier: Collaborate on strategies to improve your experience modification factor and forecast future liabilities.

In conclusion, as we move into 2026, workers’ comp continues to perform well while other lines of coverage struggle. Rate filings suggest continued stability, and barring major legislative changes or economic shocks, profitability is expected to hold.

Staying engaged with your broker, understanding your mod, and investing in safety and claims management will ensure you’re positioned to benefit in this current marketplace.

If you’re looking for guidance on workers’ compensation, understanding your experience mod factor, or seeking strategies to manage your costs effectively, reach out to The Miller Group team.