Workers' Compensation Premiums Declined in Second Quarter
National data shows workers' compensation insurance premiums fell by 3.2% during the second quarter of 2026.
Updated on Oct. 5, 2026 in Employment
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Workers' compensation insurance premiums experienced a 3.2% decline in the second quarter of 2026, marking the 18th consecutive quarter of decreases. This national trend occurs as carriers attempt to maintain revenue stability amid broader shifts in the insurance marketplace.
Why it matters
The consistent decrease in premiums reflects a competitive strategy by carriers to attract business in a stable segment while offsetting revenue losses from the softening commercial property insurance market. This trend persists despite rising loss costs and a 4% increase in medical and indemnity claim severity observed in 2025.
Private carriers reported a 91% calendar-year combined ratio for 2025, while the accident-year combined ratio for workers' compensation stood at 102%. Lost-time claim frequency dropped by 2% in 2025, even as claim severity grew by 4%.
The players
California Department of Insurance
This state regulatory body is responsible for overseeing insurance standards and approving advisory pure premium rates for employers.
The details
Insurance carriers are actively reducing pricing to remain competitive in a landscape where commercial property rates dropped 6.3% during the same period. While the sector has seen 12 consecutive years of underwriting profit, pressure from rising claim costs is expected to move future pricing toward a flat line.
Timeline
2025: Private carriers achieved a 91% calendar-year combined ratio.
September 2025: California established the advisory pure premium rates baseline.
Q1 2026: Average charged rates were 6% higher than 2025 levels.
Q2 2026: Workers' compensation premiums declined by 3.2%.
September 1, 2026: California approved new advisory pure premium rates of $1.65 per $100 of payroll.
Macro View
The insurance industry is currently navigating a period of divergence between different lines of coverage, contrasting with the historical stability seen during the past 12 years of underwriting profits. These trends reflect a complex transition where carriers balance revenue targets against shifting claim frequency and severity metrics.
Employers may see fluctuations in their insurance costs as carriers adjust pricing to balance revenue against rising medical and indemnity claim severity. Business owners should review their account-specific performance metrics with brokers to navigate these market changes and manage insurance budget impacts.
The takeaway
The insurance market is currently experiencing a strategic recalibration as carriers navigate differing pressures across property and workers' compensation lines. Business leaders should remain aware that despite current premium declines, rising claim severity could eventually lead to flatter or increasing costs.
Further reading
For more information on national labor and insurance cost trends, visit the Employment section.
Source note: This article includes information reported by Insurance Business.
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