The National Council on Compensation Insurance (NCCI) published their 2026 State of the Line Guide, which review trends, cost drivers, and significant developments shaping the workers compensation (WC) industry.

According to the report, workers’ comp net written premiums decreased 0.2% in 2025, with $41.6 billion in private carrier net written premiums. Factors for the decline are payroll and rate on payroll, mostly represented by loss cost.

 The 2025 combined ratio for workers comp is 91%, an increase from 86% in 2024, and a sign of underwriting profitability for the system. The change is due to increases in the loss and underwriting expense ratios, marking the 12th consecutive year of underwriting gains. Workers comp’s 2025 accident year combined ratio is 102%.

The NCCI estimates a redundant industry reserve position of $14B, a decrease from $16 billion in 2024, marking the second year with a slight reduction.

Lost-time claim frequency declined by 2% in 2025, a more moderate decline than the long-term average. The construction industry – the largest industry by premium volume (27%) saw the largest decrease in claim frequency at 7% between 2023-2024, yet experienced a 13% increase in claim severity, which was the primary driver for claim severity’s overall growth in 2025 at 4%. Meanwhile the Office and Health Care industries saw mild increases in claim frequency across the same period.

While there are still fewer claims overall, it appears that each claim is becoming more expensive. Medical costs appear to be rising not just due to price increases, but because injured workers are receiving more care or more complex treatment. This suggests the system is performing well today but claim costs may continue to increase if these trends continue.