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Wage increases and job growth have spiked premiums across workers’ compensation despite market challenges like medical inflation and a changing workforce, according to a recent report by Risk Replacement Services.
The property and casualty sector wrote $43 billion in workers’ comp premiums in 2023, the data showed, up from $42.5 billion in 2022. Over that same time, premiums jumped 1% across the industry at a combined ratio of 86%.
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There was also an 8% reduction in lost-claim frequency to more than double the long-term average decline in that metric. Key market drivers included continued pressure related to medical inflation and the rising cost of hospital stays and health care, and changes to the job market like an aging workforce and increased use of AI and automated services.
Meanwhile, the Bureau of Labor Statistics (BLS) reported on Friday March 7, that the U.S. economy added 151,000 new jobs in February, marking a slight improvement from the 143,000 new jobs added in January.
“In a strong job market like we’re seeing, companies face pressure to pay more when hiring,” said Patrick Edwards, area senior VP and workers’ compensation practice leader at Risk Replacement Services.
“If you’re going to attract talent, you have to pay more for that talent, and that creates a tighter job market that might otherwise be anticipated,” he added. “It is impacting premiums in workers’ comp in industry areas like hospitality and health care.”
Workers’ compensation trends to watch in 2025:
- The accident year versus calendar year loss ratios.
- Claims reserve redundancy adjustment impacts.
- State rate changes and carrier response.
- Health care inflation.
- Payroll/wage inflation and employment trends.
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Joe Toppe
Joe Toppe serves as managing editor of PropertyCasualty360.com. Joe is also a father of three, an author, and longtime lover of baseball.
