NCCI's 2026 Annual Issues Symposium runs May 12 to 14 in Orlando, and the State of the Line preview deck typically lands in the week before, between April 27 and May 1.

The headline will be the streak: private carrier workers compensation has printed a calendar year combined ratio below 90 every year since 2016, longer than any other major property-casualty line. The number that decides 2027 pricing is underneath it.

9 years
Consecutive private carrier calendar year combined ratios below 90, the longest streak in any major P&C line
~5%
Estimated 2025 medical severity trend, up from 4.2% in 2024 and against ~3% wage inflation
38 states
NCCI loss cost filing decreases proposed in the latest 2025 to 2026 cycle, smallest count since 2018
~$18B+
Cumulative private carrier favorable prior-year reserve development across the AY 2015 to 2020 cohort

Key Takeaways

  • Nine consecutive years below 90 on a calendar year basis, with the trough near 84 in 2020 and 2021 and an 86 print for 2024. No other major line comes close.
  • The accident year picture is 8 points worse. Calendar year has averaged roughly 88 across 2016 to 2024 while the accident year loss ratio implies a 96 to 100 combined once expense and dividend loads are added.
  • AY 2025 lands near 95 to 97 on a plausible CY 2025 print of 88, against 92 to 94 implied accident year combineds in the late 2010s.
  • Medical severity at 4.8 to 5.2 percent for 2025 against 4.2 in 2024 and wage inflation near 3 percent, driven by physical therapy utilization, specialty pharmacy and hospital inpatient unit cost.
  • 38 states with proposed loss cost decreases, the smallest count since 2018, against cycles in the 2017 to 2023 window where more than 45 states got a cut.

What the Streak Contains

The private carrier combined ratio has run below 90 every year since 2016, bottoming near 84 in 2020 and 2021 and drifting back to 86 for 2024. Three things held it there: frequency declining on workplace safety gains and the employment shift out of manufacturing, a reserve cushion built in the 2010 to 2015 hard-pricing window that kept releasing well after underwriting softened, and medical severity contained by fee schedule reform and pharmacy formulary controls.

The calendar year figure and the accident year loss ratio are different measurements, and they diverge by exactly the amount of prior-year development in the calendar result. Across 2016 to 2024 that divergence has been large and consistently favorable. Calendar year averaged roughly 88 while the accident year loss ratio implies a combined ratio in the 96 to 100 range once expense and dividend loads are added.

The arithmetic is simple enough to run in a line. A calendar year combined of 86 with 8 points of favorable runoff implies a current accident year combined near 94. That spread is the cushion, it is finite, and NCCI's State of the Line publishes the chart that shows where it came from.

The pandemic distorted the series in both directions. CY 2020 and CY 2021 benefited from frequency suppression as workplace exposure collapsed, CY 2022 and CY 2023 saw partial rebound but stayed below 2019 baselines, and CY 2024 was the first year the reversion looked durable rather than transitional.

Backing Into the AY 2025 Pick

Translating the published development chart into loss ratio points against the contemporaneous calendar result gives the number that 2027 filings actually have to cover.

Assume a CY 2025 combined ratio of 88, plausible against the 86 print for 2024 and the deterioration signals through the year, with expenses plus dividends at 28 points consistent with recent NCCI industry disclosures. That implies a CY 2025 incurred loss ratio near 60. If prior-year favorable development contributed 7 to 9 loss ratio points, in line with 2023 and 2024 but tapering as the AY 2010 to 2017 cushion runs down, the AY 2025 loss ratio sits at 67 to 69.

Add the 28-point load and AY 2025 comes in at 95 to 97. Not a loss-making accident year, but a clear step up from the 92 to 94 implied accident year combineds of the late 2010s, and it is the baseline that CY 2027 and CY 2028 inherit as the cushion thins.

ScenarioCY 2025 combinedImplied AY 2025 combinedReading
Streak holds, modest favorable development87 to 8994 to 97Streak intact, AY pick stable, pricing adequate
Streak holds but with frequency uptick recognized in current AY89 to 9197 to 100Streak intact on CY basis, AY pick at industry breakeven
Streak breaks, frequency reversal plus medical severity acceleration91 to 9399 to 102First sub-100 streak break since 2015, AY pick into deficit
Streak holds, but AY 2021 to 2024 adverse strengthening offsets older cushion88 to 9096 to 98Cushion thinner than reported, AY pick directionally worse

Medical severity is where the step up originates. The 2024 print was 4.2 percent and the 2025 statutory data supports 4.8 to 5.2, against wage inflation near 3 percent.

Three components carry it. Physical therapy utilization is growing in both visits per claim and cost per visit, as the alternative to opioid prescribing since the post-2017 formulary tightening. Specialty pharmacy runs the other way on volume: prescriptions are down while cost per prescription is up sharply on biologics and specialty injectables that were not on comp formularies in volume before 2022. Hospital inpatient unit cost is pulled by regional provider concentration.

Comp pharmacy controls, tracked closely in WCRI research, formulary lists, pharmacy benefit manager arrangements and fee schedules, work less well on specialty drugs than on traditional outpatient drugs, because the specialty supply chain is more vertically integrated and the unit cost basis is harder to negotiate. A medical trend indication fitted to historical comp pharmacy data therefore understates the forward run.

The Cushion Is a Net Number

The favorable development that flatters the calendar year result is not spread evenly across accident years, and the composition is what makes the next two prints harder to read than the last nine.

Accident years 2010 through 2017 contributed the bulk, with single-year recognition in the $1.5 billion to $3.5 billion range and cumulative recognition for the cohort above $18 billion across private carriers. AY 2018 through 2020 contributed smaller positive amounts. AY 2021 through 2024 are too immature to read with confidence, but early indicators through year-end 2024 ran modestly adverse.

Reported calendar year favorable development is a net figure. A rising offset from strengthening on recent accident years compresses the headline cushion even while the older cohort continues to release, which means the same reported number can describe two very different underlying positions. That trajectory belongs in the reasonable range work behind a year-end 2026 opinion under ASOP No. 36, alongside the explicit accident-year uncertainty IBNR approach Travelers used in Q1 2026.

Frequency is the variable that decides whether the cushion has to do the work alone. Aggregate frequency is still drifting lower, but the rate of decline has slowed and several categories are running flat to up: cumulative trauma as hybrid work exposed ergonomic deficiencies, motor vehicle accidents in the course of employment back above 2019 levels, and presumption claims growing as states widen the qualifying categories. If the plateau hardens, the offset that has been absorbing medical severity disappears and loss costs have to rise in most states.

The filing tally already reads that way. Decreases at 38 states are the fewest since 2018, the average magnitude is smaller, and the count of increases is the highest since 2015, with clusters across the Mountain West and Upper Midwest moving to flat or marginal increase.

State detail complicates the aggregate further. California, priced by the WCIRB rather than NCCI, has run above the national aggregate for years on cumulative trauma and presumption growth, and Florida's Estes decision reshapes older accident year exposure there for the first time in this release. Comp excess of loss, where catastrophic claims set the attachment, inherits both the severity trend and any AY 2021 to 2024 strengthening at the 1/1/2027 renewal.

Further Reading

Sources