Ryan Smith is the Senior Solutions Advisor for True Insurtech Solutions
Every May, workers’ compensation professionals gather in Orlando for the NCCI Annual Insights Symposium. And every May, the session everyone waits for is the State of the Line.
This year’s report, delivered by NCCI Chief Actuary Donna Glenn, will provide the most comprehensive look at how the workers’ compensation system performed through 2025, with updated financial indicators, trend lines, and the economic markers that shape where this line of business is headed. There will also be a deeper dialogue session with NCCI actuaries Dan Benzshawel, Nadege Bernard, and Dan Cunningham, plus Donna’s own cross-state themes session later in the program connecting economic, medical, infrastructure, and workforce trends to state-level performance.
Where We Stand Going Into AIS 2026
The most recent data paints a picture of a line that is performing well by nearly every traditional measure, but one where the underlying dynamics are getting more complex.
NCCI’s 2025 State of the Line and its subsequent year-end update confirmed that 2024 was the eleventh consecutive year of underwriting profitability for private carriers in workers’ compensation. The calendar year combined ratio came in at 86.1%, marking the eighth straight year below 90. The operating gain landed at 23.7%, continuing what NCCI has described as the most profitable period in at least 30 years.
Those are strong numbers. But the full picture is more nuanced than the headline suggests.
Premium Is Shrinking. That Matters.
Net written premium for private carriers fell 3.2% in 2024, landing at $41.6 billion. Workers’ compensation was the only P/C line to post a premium decrease that year, and the trend is not new. Rate decreases have outpaced payroll growth, compressing the premium base even as the underlying exposure continues to evolve.
The longer view is more striking. Workers’ compensation’s share of total commercial lines premium has dropped from 17% in 2004 to just 10% in 2024. The line is getting smaller relative to the rest of the P/C market, not because the risk is going away, but because two decades of favorable results have driven rates steadily downward.
For carriers and administrators, this isn’t just an abstract market share statistic. Shrinking premium means shrinking revenue against a backdrop of rising operational complexity. The organizations managing workers’ compensation books today need to do more with less, which makes questions about operational efficiency, technology investment, emerging innovations in AI, and platform capability more urgent than they’ve been in years.
Frequency Is Down, But the “Why” Is Getting Complicated
Lost-time claim frequency declined by an estimated 6% in 2024 (updated from the initial 5% estimate shared at AIS 2025). That’s faster than the long-term average annual decline of about 3.6%, and it marks the third consecutive year of above-average frequency drops.
On the surface, this is good news. Fewer workers are getting hurt. But the drivers behind the decline are uneven, and that unevenness has real implications for how carriers assess risk and allocate resources.
Remote work continues to suppress office-worker claim frequency. Automation is reducing injury rates in leisure and hospitality. Healthcare has seen significant reductions in strain-related injuries. But private education is trending the other direction, with rising “struck or injured by” claims linked to workplace violence. And motor vehicle accidents remain stubbornly resistant to the broader frequency decline. They’re still the leading cause of workplace fatalities and produce claims that cost significantly more than the average lost-time case.
The point is that a single countrywide frequency number can mask very different realities depending on which industries, geographies, and workforce segments you’re writing. Going into AIS 2026, I’ll be watching closely for how NCCI frames the industry-level and state-level frequency picture. Because the decisions you make about book composition, pricing strategy, and claims resource allocation need more than a topline trend.
Severity Is the Story to Watch
While frequency has been the feel-good narrative for years, severity is where the tension lives.
Both medical and indemnity lost-time claim severity increased by approximately 6% in 2024 (with the indemnity figure later revised to 5%). Total claim severity has been growing at roughly 2% per year on average since 2004, but recent years have shown acceleration. This isn’t a blip. It’s a pattern that demands attention.
The components driving medical severity are particularly important. NCCI’s data shows that utilization growth, not just pricing, is pushing costs higher. Fee schedules help manage price increases in many states, but utilization patterns can offset those controls. Physical therapy utilization is up across all medical conditions. Pain management now accounts for about 30% of annual medical cost per claim. And for the largest claims (those exceeding $5 million in total incurred losses), medical expenses represent roughly 90% of total cost.
If frequency continues to decline but severity continues to rise, the margin of comfort in that sub-90 combined ratio starts to compress. That’s the tension NCCI will likely address at AIS 2026, and it’s the tension every workers’ comp organization should be planning around.
Reserves Look Strong. For Now.
NCCI estimated the industry’s redundant reserve position at $16 billion heading into 2025. That’s a robust cushion, and prior accident years have continued to develop favorably. But it’s worth noting that the 2024 estimate was the first year to show a slight reduction in that redundancy.
Downward reserve development has been a consistent tailwind for calendar year results, contributing to favorable combined ratios year after year. If that development slows or reverses, calendar year results will feel it. This is another metric I’ll be tracking closely at AIS 2026, because reserve adequacy isn’t just a backward-looking indicator. It tells you something about how much room the system has to absorb surprises.
The Cross-State Dimension
One of the more valuable additions to this year’s AIS agenda is Donna Glenn’s session on connecting themes that impact results across states. Workers’ compensation has always been a state-by-state business, but the factors driving divergence between states are getting more layered.
Economic conditions, medical cost structures, workforce demographics, and regulatory frameworks all interact differently in different jurisdictions. A carrier operating in a single NCCI state has a very different strategic calculus than one managing a multi-state book that includes California and New York (both of which have their own independent rating bureaus). NCCI’s 2025 data showed that 31 states experienced decreases in direct written premium, but the magnitude and drivers varied meaningfully by state.
For multi-state operators, the ability to understand state-level results in context, not just as isolated data points but as outcomes shaped by local workforce trends, medical cost dynamics, and regulatory environments, is a competitive advantage. That’s exactly the kind of intelligence this session should deliver.
What I’ll Be Watching at AIS 2026
When Donna Glenn takes the stage, here’s what I’ll be paying attention to:
- How much did severity accelerate in 2025? The 6% increases in 2024 were notable. If 2025 shows similar or higher growth, the pressure on combined ratios will start to show up in ways that rate decreases can’t absorb.
- What does the updated frequency picture look like by industry? The countrywide number matters, but the sector-level data is where the actionable insight lives. Are the same segments driving the decline, or are new patterns emerging?
- Where does reserve redundancy land? The direction and magnitude of the change from $16 billion will signal how much runway the industry has before calendar year results tighten.
- How is the premium compression story evolving? If rate decreases continue to outpace payroll growth, premium will keep shrinking. At some point, that math creates real operational pressure.
- What state-level patterns are diverging from national trends? The cross-state themes session is new for 2026, and it could be one of the most strategically valuable presentations on the agenda.
Why This Matters for Your Organization
The State of the Line gives the industry a shared reference point. But the numbers only matter if you translate them into action.
If you’re operating with legacy systems that make it harder to analyze your own book performance at the granularity NCCI provides at the national level, you’re already at a disadvantage. If your claims operation can’t identify and respond to severity trends in real time, you’re managing reactively in a market that rewards proactive insight. And if your technology platform can’t support the kind of state-level analysis that multi-state operations demand, your strategic planning is built on incomplete information.
The organizations that get the most value from State of the Line data are the ones with the infrastructure to act on it. That means modern policy administration, claims management, and analytics capabilities that turn industry benchmarks into organizational intelligence.
