Pressured at Both Ends: Changes in Labor Market Affect Small Business Workers’ Comp

Now is a great time for brokers to update their workers' compensation playbook.

By: Michael Nunney | September 24, 2026

The workers’ compensation insurance market overall in the United States has been on a run of solid underwriting results. In 2025, the National Council on Compensation Insurance (NCCI) reported a 91% calendar year combined ratio and a 2% decline in frequency.

While the market has been driven by these tailwinds, those winds are starting to subside. Whatever the workers’ compensation macro picture looks like, though, claims can put pressure on small businesses at both ends of the worker experience spectrum. Newer workers might suffer injuries more frequently due to unfamiliarity with the risks of a job. More-experienced workers might endure injuries complicated by comorbidities, delaying their return to work.

This makes it the perfect time for agents to update their knowledge of the market and refresh their client guidance.

New entrant and skill-gap challenge. When new employees start, typically they might be handed a safety manual, shown a safety video, and be sent into the workplace. That introduction might not yield fundamental safety awareness.
Aging workforce challenge. More-experienced workers may benefit from greater familiarity with workplace hazards, but injuries can become more complex when longer recovery times or underlying health conditions are involved.

Recovery Options

One of the advancements in recent years for many workers’ comp carriers is expanding recovery options for injured workers beyond the traditional binary choice of either returning to full-time work or staying out on workers comp. Important for small business employers to consider are models that allow employees to work modified duty or work in a nonprofit organization to gain back functionality for eventual reentry into full-time work.

This strategy can help smooth the transition back into an employee’s normal job. It also allows carriers to better manage workers comp indemnity dollars while shortening comp claims to improve outcomes for both employer and employee.

Risk Management Ideas for Insurance Brokers

Workers’ compensation includes income, medical and death benefits that can prove valuable to businesses and their workers. But many small business owners often are not aware of the coverage on a day-to-day basis. For their part, agents play a key role here by learning and understanding what different carriers offer — especially because small business customers are not focused on emerging trends in insurance.

Here are five insights for agents to consider when advising their small business workers’ comp clients:

Training

High-performing employers are bridging gaps in training, especially among new workers, by shifting from short-duration training to an approach focused on job mentoring. “Watch me do it, then let’s do it together” are the watchwords for this type of training. Frequently, companies pair this on-the-job training with a buddy system where new employees perform their job under the watchful eye of an experienced employee. Then they transition to moderate supervision. Small businesses often must create this type of solution in-house because carriers in the small business workers comp market don’t always provide the same resources (such as loss control engineering and carrier-led training) they might deliver to larger accounts.

Agents also can help a client identify the higher-hazard parts of a job, suggest training approaches, and create a feasible schedule of new worker check-ins during the workday. Finding ways to make work less arduous is a key to helping to reduce workers compensation risk in jobs involving manual labor, especially for experienced workers. For example, reducing repetitive motion or heavy manual lifting, using tandem lifting, and adding tow motors are ways that can help the worker reduce their risk of injury.

Experience Modification

Agents can be helpful by gaining knowledge of and understanding their client’s experience (referred to as the employer’s “experience mod”), while realizing that the experience modification process weighs frequency most heavily, followed by severity. Recent changes to NCCI’s experience rating methodology can change how individual losses affect an employer’s experience mod, and agents and insureds are still becoming familiar with those changes.

Once agents understand what is driving the experience mod, they can guide the employer to adjust their risk profile. If frequency is up in the area of slip-and-fall claims, for instance, the agent can help the client address that by requiring non-slip shoes or cleaning the facility more often.

Taking time for due diligence about the employer’s experience modification empowers the agent to confer with the workers’ comp underwriter, explaining what’s driving the client’s experience.

Audit

Many small business owners are already aware that their workers compensation policy will be audited on an annual basis. They might not be aware, though, of the impact that blended jobs might have on the audit and policy premium.

When an employee performs work that could fall under multiple classifications, accurate payroll and time records are important. Depending on the applicable classification rules, payroll may be divided among classifications when adequate records are maintained; without those records payroll may be assigned to the highest-rated classification. Agents can help clients by stressing the importance of accurate recordkeeping for the time when the audit rolls around.

Value Added

Many carriers routinely use cost-containment tactics, such as medical bill review, for small business accounts. Learning about and sharing how carriers are “fighting the good fight” against costs is a way for agents to add value to their client relationships.

Early Intervention

One of the best ways that agents can help clients minimize workers’ compensation claims is with early medical intervention. Many workers’ comp carriers have a nurse triage hotline to provide immediate response to a potential workplace injury. That helps the worker gain the right medical care at the right time.

Agents can serve a key role as an insurance advisor while also providing small business owners with the appropriate workers compensation coverage. Keeping track of trends in the workers comp market empowers independent agents and other insurance professionals to strengthen their relationship with their small business clients. &

Michael Nunney is product management director focused on small business workers compensation for Westfield Insurance®. With 22 years of experience in the property and casualty insurance industry, Mike has held roles in underwriting and underwriting management across a variety of lines of business, with a particular specialization in workers compensation.

How AI is Reshaping Cyber Risk and Why Resilience Now Matters More Than Prevention

Artificial intelligence has dramatically lowered the barrier to entry for cybercrime, forcing organizations to rethink how they prepare for, respond to and recover from attacks.

By: MSIG USA | September 1, 2026

The cyber threat landscape has shifted dramatically in just the past two years. Attacks that once required months of skilled effort by experienced hackers can now be executed in a matter of minutes, thanks to the rapid evolution of artificial intelligence. And in at least one recent incident, an autonomous AI-driven attack occurred with virtually no human involvement.

This reality is changing how underwriters, risk managers and executives approach cyber risk. Preventative controls remain essential, but they are no longer sufficient on their own. Increasingly, the organizations weathering cyber events best are those that have built resilience into every layer of the business.

“Because of AI, it’s almost impossible to completely avoid a cyber attack,” said Ryan Kratz, Head of Cyber for North America at MSIG USA. “We’re really focusing on resiliency first now more so than ever. How are you responding to an attack? What are your business processes in place to recover from that attack?”

An AI Arms Race Is Reshaping the Threat Landscape

Ryan Kratz, Head of Cyber for North America, MSIG USA

Three or four years ago, cyber underwriting conversations centered largely on preventative measures, those being multi-factor authentication (MFA), endpoint detection and response (EDR), and similar controls. Those controls still matter, Kratz said, but the introduction of AI into both offensive and defensive environments has fundamentally changed the risk picture.

On the offensive side, AI has compressed the timeline for attackers. “Two years ago, it could take months for even a really good hacker to find their way into an ecosystem, where now it could potentially take minutes,” Kratz said.

On the defensive side, Kratz sees organizations racing to deploy AI internally, sometimes without the governance, oversight or inventory management necessary to do so safely.

“We’re in an AI arms race amongst organizations,” he said. “I get it. You don’t want to fall behind, particularly compared to your competitors. At the same time, you need to do it in a responsible manner.”

Compounding the challenge is the third-party dimension. Nearly every cyber event MSIG USA sees today has a third-party component, whether from IT vendors, cloud providers or other partners integrating AI into their own environments.

“It’s very rare now for a cyber event to happen in isolation,” Kratz said. “The majority of events we see happen from some kind of third-party event that ultimately creeps its way into an insured’s ecosystem.”

There’s also a workforce dynamic worth noting. As experienced professionals retire and younger employees increasingly rely on AI tools, organizations risk losing institutional knowledge about business processes and incident response, while simultaneously expanding their technology exposure.

The Traits That Define Resilient Organizations

While prevention remains a core underwriting focus, Kratz said the organizations that recover fastest from cyber events share a common set of characteristics. Chief among them: cyber risk is treated as an executive- and board-level issue rather than a technology problem.

“We traditionally thought of cyber risk as a technology event,” he said. “It really is an organizational and executive board-level event now. It’s not just about getting your technology systems up. It’s about keeping your business up and running.”

The organizations that bounce back most quickly tend to prepare in several deliberate ways:

1. Tested incident response plans with executive buy-in. The strongest programs bring the CEO, CSO and other executives into annual tabletop exercises alongside outside counsel, with clearly defined roles for who makes which decisions when an event occurs.

2. Business continuity plans that identify critical assets in advance. Knowing which systems need to come back online first — before an event occurs — minimizes downtime and business impact.

3. Immutable, offline backups. “Organizations with offline immutable backups are able to fairly quickly shift to those and recover, potentially without paying a ransom and without extended, prolonged downtime,” Kratz said.

4. Cybersecurity integrated into business continuity. Many organizations already have robust business continuity plans for property-related downtime. Kratz recommends applying the same rigor to cyber. “If a manufacturing plant goes down because of a cyber breach as opposed to a property event, I’d like to see a similar response,” he said.

5. AI governance, policies and procedures, now. Rather than waiting, organizations should establish AI governance frameworks, inventory the AI agents deployed in their environments, define what those agents can do autonomously, and set clear rules around what data employees can input into them.

“Don’t get caught on your heels,” Kratz said. “AI is here, and it’s going to get faster and stronger. Develop those policies and procedures now so you’re not trying to catch up later.”

Of course, the foundational hygiene controls still matter. MFA, EDR, vulnerability management, privileged access management and employee security awareness programs cannot be allowed to erode, even as attention shifts toward resilience.

Conversely, the organizations that struggle to recover tend to react in an uncoordinated manner, lack executive alignment, or deploy new technologies without proper governance in place.

How MSIG USA Approaches Cyber as a Resilience Partner

As MSIG USA expands further into the primary cyber policy space, the carrier is building its approach around a resilience-first philosophy. That is one that treats cyber insurance not as a transactional product, but as an ongoing partnership.

“I don’t think cyber insurance should be transactional and end when the policy binds,” Kratz said. “Yes, we are a risk transfer tool for insureds, but we should also be there throughout the life cycle of a policy to help them.”

As a leading, data-driven specialty insurer, MSIG USA is developing technology designed to move underwriting from a static, point-in-time exercise to a dynamic one. That includes active monitoring capabilities. For example, alerting insureds to zero-day vulnerabilities they may be exposed to so they can act quickly to mitigate them.

The carrier is also focused on helping insureds understand the broader ecosystem of technologies that shape their cyber exposure, from cloud providers and vendors to operational partners and customers.

“Cyber is not a one-stop risk anymore,” Kratz said. “We want to help our insureds identify the ecosystem of cyber technologies they’re using. This will help them understand the full spider web of technology that might impact their environment.”

From an underwriting perspective, that means asking a more expansive set of questions: What AI agents are deployed in your environment? Are they subject to human oversight? What sensitive data are employees inputting into them? What controls prevent unauthorized data leakage? And how are third-party vendors using AI in ways that might affect your data?

Looking ahead, Kratz expects autonomous AI-driven events to become a defining feature of the cyber landscape — one that both insureds and underwriters must be ready to navigate.

“We, as underwriters and our insureds, are going to have to expect to live in a world where AI can function effectively autonomously, without that human element,” he said. “We need to be able to adapt to that as an underwriting market.”

To learn more, visit https://www.msigusa.com/.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with MSIG USA. The editorial staff of Risk & Insurance had no role in its preparation.

MSIG USA is the marketing name of certain underwriting subsidiaries of MSIG Holdings (U.S.A.), Inc. Not all insurers do business in all jurisdictions. Actual coverage is subject to the language of the policies as issued. The insurers are managed by Mitsui Sumitomo Marine Management (U.S.A.), Inc. with offices at 15 Independence Boulevard, P.O. Box 4602, Warren, NJ 07059-0602, USA.