Workers’ Comp Sees Strong 2023 Results, Positive 2024 Outlook: NCCI

NCCI's State of the Line Report shows workers' comp insurers are poised for another year of strong financial performance in 2024.
By: | October 25, 2024
Topics: News | Workers' Comp

A preliminary analysis of workers’ compensation results through the second quarter of 2024 shows positive signs of yet another strong year ahead, despite a slight decrease in premium volume in the first half of 2024, according to the National Council on Compensation Insurance’s (NCCI) latest State of the Line Report.

The workers’ comp insurance industry delivered another year of strong financial results in 2023. Final countrywide data shows that private carrier net written premium increased 1.1% from the prior year to $43.0 billion, according to the report. In addition, carriers achieved a combined ratio of 85.9%, resulting in a robust 23.1% operating gain.

These figures reflect the most current data available, including preliminary estimates from NCCI. The 2023 results mark the continuation of a positive trajectory for the workers’ comp line, which has now posted underwriting profits for 10 consecutive years.

Several factors contributed to the industry’s 2023 performance. Claim frequency continued its long-term decline, while severity saw only moderate changes. Wage growth helped offset rate decreases, with NCCI reporting that payroll rose about 6.5% in the first half of 2024 compared to the same period in 2023.

Looking ahead, NCCI expects 2024 premium volume to be in line with 2023 levels and underwriting gains to continue, though likely in a range of 83-90% on a combined ratio basis, the report noted. While medical costs and the impact of economic conditions remain areas to watch, the overall workers’ compensation industry maintains a position of strength and stability.

Early Signs Point to Another Strong Year in 2024

While still early and subject to revision, private carrier direct written premium decreased by nearly 1% through the first half of 2024 compared to the same period in 2023, NCCI stated. The direct loss ratio stands at 48%, one percentage point higher than the first half of last year.

Despite the slight downtick in premium, NCCI expects the workers’ compensation line to experience continued robust performance in 2024, with underwriting gains comparable to recent years. The net premium volume will likely be in the vicinity of 2023’s $43.0 billion figure, according to the report.

Several key factors are contributing to the optimistic outlook for workers’ compensation in 2024. Rate and loss cost level changes are estimated to decrease by about 9% on average, driven by declines in lost-time claim frequency and moderate changes in claim severity, the report noted. Additionally, payroll is projected to increase by 6.5%, fueled by a 1.5% rise in employment paired with 5% wage growth.

Taking into account the preliminary results and recent year-end versus second quarter loss ratio patterns, the 2024 year-end net combined ratio will likely range between 83% to 90%. If this holds true, it would mark the 11th consecutive year with a calendar year combined ratio under 100% for workers’ compensation insurers, NCCI stated. All early indicators are pointing to the workers’ compensation line continuing its run of strong financial health and stability in 2024.

Access the full State of the Line Report here. &

The R&I Editorial Team can be reached at [email protected].

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