While there are some issues that could eventually affect the workers compensation line, much of the story was the same with regards to 2023 mid-year renewals, according to experts who say the line remains the most profitable, competitive and predictable.

Medical inflation, the aging workforce, and economic uncertainty are among the issues experts say they are watching.

Any ill effects on the industry, however, are likely to be offset by a favorable claims environment marked by low frequency combined with better safety measures.

This is the ninth year in a row for line profitability, according to the National Council on Compensation Insurance.

“The themes that we continue to see are that the line is favorable and predictable for clients and profitable for insurers because there's underwriting profit, including six consecutive years of combined ratio under 90%, and billions in reserve redundancy,” said Debbie Goldstine, Chicago-based executive vice president and U.S. casualty leader for Lockton Cos. LLC. “All of that just creates a continuation of this competitive environment.”

Jeff Eddinger, Boca Raton, Florida-based senior division executive with NCCI, said insurers are also seeing higher premiums.

NCCI in May reported that net written premium increased 11% in 2022 to $47.5 billion, a level similar to 2019 prior to the start of the COVID-19 pandemic. “Premiums are going up because more people are back to work and wage increases are higher than they've been in recent years,” Mr. Eddinger said.

The industry remains cautiously optimistic, experts said.

“Everybody is talking about medical inflation, and I think we all acknowledge that's real,” Ms. Goldstine said. However, “the reported results, coupled with a good interest rate environment, are going to keep the market competitive,” she said.

Job losses tied to a potential economic downturn is an area to watch, Ms. Goldstine said.

“Probably the biggest risk for this line of business is job loss,” she said. “If we hit an economic recession, job losses make return to work hard.”

During the last recession claims durations increased, and “that increased severity,” she said. “So, I think that could be the other shoe to drop that would actually maybe cause some change or accelerate market change.”

Haytham Zohny, New York-based senior vice president, complex risk and casualty practice, for broker Arthur J. Gallagher & Co., said another trend to watch in the market relates to forever chemicals in many industrial spaces.

While deemed an environmental and property liability concern, “we're actually starting to see that impact on workers compensation,” he said.

“There are chemicals that really don't break down in the environment they're used in, in all the manufacturing processes,” he said. “The reason why we're starting to see that more in comp is because of the manufacturing space.

Insurers are starting to get hesitant regarding that exposure because there are signs that (exposure to the chemicals) leads to potential cancers and other health effects.”