Workers’ Compensation Outpaces P&C Lines with Sustained Profitability and Low Claims Frequency

The workers’ compensation insurance market is outperforming all other major property and casualty (P&C) lines, reporting an 88.7 combined ratio in 2023, according to a recent AM Best report. This sustained profitability is significantly supporting the broader P&C industry, particularly in commercial lines. The report credits several factors for this success, including improved workplace safety initiatives, a long-term decline in claims frequency, and lower fraud and defense costs. These favorable trends have allowed workers’ comp insurers to maintain strong underwriting margins and profitability.

A notable $6.9 billion in favorable development on prior loss reserves also boosted profitability in 2023, with an estimated $18 billion in redundant reserves predicted moving forward. Despite steady declines in renewal pricing since 2015 (except during the pandemic), overall premium growth continues, supported by wage increases and exposure trends.

Fierce competition defines the workers’ compensation market, with the top 25 carriers controlling nearly 67% of the market. Travelers Group leads the pack, but competition remains tight, as other leading carriers close in on market share.