During midyear renewals, workers compensation rates were flat, and the line of business remains one of the most desirable and least volatile sectors for insurers, experts say.

The years-long pricing trend reflects declines in claims frequency, as workplace safety improves, and increased capacity as new entrants add competition to the market.

Claims cost severity is increasing as the workforce ages, but the buyer’s market for comp is unlikely to change, experts say.

“The marketplace continues to be incredibly competitive for buyers of the workers comp product,” said Mark Moitoso, Atlanta-based risk practices leader for Lockton Cos. LLC.

The competition is powered in part by new managing general agents and managing general underwriters “that are coming online that want to write work comp” and “the traditional writers who continue to lean in and profess their desire to grow,” he said.

“There are a lot of players that are there in the game, whether it's individual carriers, MGUs and MGAs, captives. … You have a lot of different options that are in the space right now,” said Pat Edwards, Chicago-based workers compensation practice leader, at Risk Placement Services Inc. “Capacity is a big, big driver of why pricing is still holding at a very soft level.”

Profitability during otherwise turbulent business times is also a driving force.

“You've got eight years of profitability, combined ratios under 100 and the last five years under 90%. There's a lot of competition for workers compensation today,” said Casey Petersen, North America primary casualty leader for Willis Towers Watson PLC in Chicago.

The competition has also led to a bundling trend for businesses seeking more complicated coverages, he said.

Insurers are willing to offer capacity for more difficult lines of business if they can secure a policyholder’s workers comp business, Mr. Petersen said. “Because the line of business all the carriers want to write is the workers comp, they will offer up the scarier lines of business.”  

Inflation, which has been increasing for months, is yet to have a significant effect on the comp sector, experts say.

“Everybody's worried about general price inflation. But the information that we're looking at shows that's not necessarily translating over to workers comp, as workers comp medical costs are not being influenced by inflation,” said Jeff Eddinger, a senior division executive for the Boca Raton, Florida-based National Council on Compensation Insurance.

Increased wages, which could lead to higher disability payments, are not yet a concern for workers comp insurers, Mr. Moitoso said.

Increased payroll also leads to increased revenue for insurers because premiums are based on payroll, he noted.

COVID-19, which led to several states passing workers comp presumption laws for first responders and others, also had little effect on midyear renewals, experts say.

Most presumption laws have expired and the claims that were filed generally were not expensive. Long COVID, however, remains a concern.

“The vast majority of claims that we assessed were really short-term, lost-time claims with no medical payments,” Mr. Moitoso said. “The unknown is, what are the implications for long haulers? We don't know that yet. It is still a risk, but, at the end of the day, the vast majority of COVID (claims) were very small financially impacted claims.”

Mr. Eddinger, whose organization earlier this year announced plans to study long COVID claims, said the volume and trajectory of those claims are unclear. “I think it just adds some uncertainty for certain businesses,” he said.