In 2024, the National Council of Compensation Insurance reported a 1% increase in workers’ compensation net written premium from 2022 to 2023. This small premium increase is primarily due to increases in payroll offsetting the decrease in loss costs. The improvement in loss costs can be attributed to the continued focus on worker safety and technological advancements, contributing to fewer workplace injuries. This highlights the critical need to uphold a safety-first culture on the job.
Driving Factors Behind the Increase
Several elements have contributed to this substantial rise in premiums. Economic recovery post-pandemic, wage inflation, and an increase in employment rates have all played a role. Additionally, heightened workplace safety standards and increased medical costs have added to the financial burden on workers’ compensation insurers.
Implications for Employers and Insurers
For employers, this increase in premiums translates to higher operational costs. Companies may need to invest more in workplace safety programs and injury prevention measures to mitigate these costs. For insurers, the challenge lies in balancing premium rates with the need to remain competitive in a market that is under constant pressure from regulatory changes and economic fluctuations.
Strategic Adjustments
Insurers are likely to focus on improving risk management and underwriting practices to better handle the rising costs. Leveraging advanced analytics and technology to predict and prevent workplace injuries can also be a key strategy. Employers, on the other hand, might explore captive insurance options or self-insurance to manage their workers’ compensation expenses more effectively.