Based on Swiss Re's analysis of information from multiple sources:

While there continues to be significant reserve redundancy, reserve releases in recent years have served to mask underlying deterioration of Accident Year combined ratios (CoR).
Fierce competition in states such as California has led to significant premium rate reductions and a softer market, raising pricing concerns and increasing loss ratios.
Medical inflation, relatively benign in recent years, has resurfaced, with hospital costs the main driver, as well as increased post-COVID utilization.
A tight job market with low unemployment often results in hiring less experienced workers, potentially resulting in more first-year injuries in select industries.
Safety gains that have buoyed the market in recent decades by reducing frequency of workplace injuries may be moderating, potentially limiting future upside in this area.

After prolonged pressure on premium rates amid a favorable environment, emerging challenges for the industry suggest that pricing discipline is necessary to avoid unsustainable developments. Re/insurers that have benefited from the workers' compensation insurance market as a source of consistent profit for an extended period should consider a more cautious approach as they aim to minimize negative impacts. Disciplined underwriting to ensure pricing is matched appropriately with the evolving risk landscape will be paramount.

Special Reports /

Swiss Re: Challenges ahead for workers' comp market

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