A recent report from Moody's Investors Service shows that the U.S. workers' compensation (WC) sector has improved significantly since 2011 as the domestic economy and labor market have gradually recovered and insurers achieved cumulative rate increases. However, competition is increasing and profitability, while good, is diminishing.

Further margin compression is likely over the next two years, according to the report, which noted that the WC sector's fortunes are closely tied to the U.S. labor market, given the compulsory nature of the benefits the insurance provides. The falling national unemployment rate, 4.4% as of June 2017 from near 10% several years ago, is positive for the sector.

And if you were wondering about how much significance the WC sector has, Moody's report notes that WC is the largest single commercial line for US P&C insurers, comprising nearly 19% of U.S. commercial lines premium volume and approximately 10% of the P&C industry's total direct premiums written, behind only personal automobile and homeowners insurance.