Workers’ Comp Remains Profitable in 2024 as Claim Severity Rises and Premiums Drop

The workers’ compensation insurance market continued to perform well in 2024, achieving an 86% combined ratio and extending its streak of underwriting profitability to 11 consecutive years. This success came even as net written premiums declined by 3%, totaling $41.6 billion for private carriers and $46.3 billion when including state funds, according to NCCI’s State of the Line report.

While the line remains profitable, its share of the commercial insurance market has gradually decreased over the past two decades—from 17% in 2004 to just 10% in 2024—as other lines have seen faster premium growth. Still, the workers’ comp loss ratio remained under 50% for the eighth straight year, and reserve development from prior years continues to be favorable.

Rising claim severity was a notable trend in 2024. NCCI estimates that average total lost-time claim severity grew by 6% compared to 2023, with both medical and indemnity components contributing to the increase. Higher wages have driven indemnity severity up in particular. In high-value claims exceeding $5 million, medical costs made up as much as 90% of the total incurred losses.

Despite severity increases, claim frequency declined for the third year in a row—dropping 5% in 2024—helping to offset the impact of more expensive claims. This sustained drop in frequency is expected to continue and remains a key factor in preserving profitability in the face of wage inflation and rising medical costs.