Workers' Compensation Premiums Fell 3.2% in Second Quarter
Businesses saw lower insurance costs in Q2 2026 even as individual claim severity increased by 4%.
Updated on Oct. 5, 2026 in Employment
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Nationwide workers' compensation insurance premiums declined by an average of 3.2% during the second quarter of 2026. This period marked the 18th consecutive quarter of decreases for these employer costs.
Why it matters
Insurers are reducing premiums in this sector to remain competitive and maintain revenue targets while offsetting declines in the commercial property insurance market. These adjustments occur despite rising medical and indemnity costs per claim.
Workers' compensation premiums dropped 3.2% in Q2 2026, extending a multi-year streak of declines. This trend contrasts with rising claim severity, which saw medical and indemnity costs increase by 4% in 2025.
The players
California
A state that regulates advisory pure premium rates for employers within its jurisdiction.
The details
Insurance carriers are adjusting pricing strategies to manage overall revenue pressure, using workers' compensation to attract clients. While claim frequency dropped by 2% in 2025, the 4% rise in medical and indemnity costs per claim places upward pressure on pricing. Brokers are currently balancing these rising internal loss costs against the broader market price reductions.
Timeline
2025: Private carriers reported a 91% calendar-year combined ratio.
Q1 2026: Average charged rates were 6% higher than 2025 levels.
Q2 2026: Workers' compensation premiums declined by 3.2%.
September 1, 2026: California implemented new advisory pure premium rates.
Money Landscape
The current insurance market reflects a shift where carriers aggressively manage rates to offset revenue volatility in other sectors. This pattern follows the established regulatory path set by California's advisory pure premium rate system.
Business owners may benefit from current competitive pricing in workers' compensation, but should monitor internal claim severity to anticipate future cost shifts. Consult with your insurance broker to compare your company's risk engineering metrics against these national trends.
The takeaway
While national premium trends show a decline, rising claim severity means total insurance costs remain complex for employers. Business leaders should review their recent risk engineering data and discuss projected premium stability with their professional insurance advisors.
Further reading
For more information on labor costs and business expenses, visit our Employment section.
Source note: This article includes information reported by Insurance Business.
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