While modest decreases in loss costs and rates are still expected going forward, the National Council on Compensation Insurance released a report Friday that revealed the pace of decline has slowed as wage growth has normalized relative to post-pandemic highs and medical severity has seen an uptick in utilization of medical services.
Boca Raton, Florida-based NCCI found that preliminary financial data for 2025 indicate a projected combined ratio to fall between 85% and 93%, suggesting ongoing underwriting strength in the workers compensation system. Additionally, broader industry data from NCCI show that lost-time claim frequency has continued to trend downward, though medical and indemnity severity have increased modestly in recent accident years, signaling evolving cost pressures.
The organization attributes past decreases to sustained declines in claim frequency, moderate changes in medical and indemnity costs, and growing payroll exposure that expands the premium base.
Although NCCI forecasts continued modest reductions in loss costs and rates in the near term, it cautions stakeholders to monitor several potential disruptors that could alter the trajectory. These include a reversal in frequency declines, accelerating medical cost inflation, shifts in utilization patterns, legislative changes affecting benefit design or cost structures, major economic disruptions and broader labor market dynamics.