Workers compensation insurers reported their most profitable year in 2016 since the Great Recession despite facing economic, regulatory and legal challenges, according to a report by A.M. Best Co.

In 2016, workers comp insurers reported a record high $58.5 billion in direct premiums written amid an increase in payroll base, according to the report released on Monday. By comparison, direct written premiums dropped to a 10-year low of $40.3 billion in 2010.

The combined ratio of workers comp insurers improved slightly to 95.5 in 2016 compared to 96 in 2015, amid a 1.7-point improvement in loss experience, largely aided by $3.2 billion in workers comp reserve releases last year, according to the report.

After the 2008 financial crisis, the workers comp market hardened: payroll base and premiums shrank, rates rose and the number of writers of the coverage declined. But in 2013, rate increases began to decline and rate decreases became the norm by the beginning of 2015 — a trend that continued in 2016 and has yet to affect the bottom lines of comp insurers, according to the report.

“Despite success in 2016, these insurers face many economic, regulatory and legal issues that will continue to challenge and reshape the market,” the report stated. “A.M. Best currently has a negative outlook on the commercial lines segment, of which workers’ compensation is the largest component, and workers’ compensation insurers remain under pressure due to decreasing rates and increasing competition. Nevertheless, improved loss experience from a decline in frequency and the leveraging of technology greatly benefitted these companies’ bottom lines in 2016.”

The Travelers Group is the top writer of workers comp insurance, with net written premiums of nearly $4 billion and an 8.3% market share in 2016, according to the report. Rounding out the top five comp writers are Hartford Insurance Group, State Insurance Fund WC Fund, Berkshire Hathaway Insurance Group and Liberty Mutual Insurance Cos.

The top 10 writers of workers comp insurance accounted for $21.1 billion in net written premiums in 2016, down 2.8% from the previous year, and a 43.8% market share, according to the report.

“Decreasing rates and increasing competition have made achieving a balance between retaining profitable accounts and maintaining market share more difficult,” the report said.

Total workers comp direct premiums grew by 1.5% in 2016, according to the report. But of the 50 states and the District of Columbia, 27 had an increase in direct premiums and 22 experienced a decrease. Of the four states with monopolistic state funds, Ohio and Washington saw increases while North Dakota and Wyoming experienced decreases.

All U.S. jurisdictions continue to face unique regulatory and legal issues that can have huge effects on claims costs and premiums, according to the report. For example, although California lowered its advisory pure premium rate by 16.5%, from $2.42 per $100 of payroll to $2.02, it is still the most expensive workers comp state, with an average cost of $3.24 per $100 of payroll.

“Fraud remains one of the biggest issues, with a large portion of fraudulent claims coming from Southern California,” the report said. “Also, California has proposed a new drug formulary, scheduled to take effect Jan. 1, 2018, that aims to reduce prescription drug costs and disputes over requests.”