Will workers’ comp insurance premiums increase in 2025?
Risk Strategies: Wage inflation, reduced rates and increased size of primary claims are concerns.
There is potential for an uptick in workers’ compensation costs in 2025 despite a softer market.
Data compiled by Risk Strategies shows wage inflation, reduced rates and increased size of primary claims could lead to premium increases.
Wage inflation rose 4.8% from March 2023 to March 2024, according to Risk Strategies, while some states reduced workers’ comp rates. At the same time, the National Council on Compensation Insurance (NCCI) increased the size of primary claims to up to $18,000.
Risk Strategies said companies with good loss experience would likely not see much change. However, employers with claims over the higher threshold may see higher premiums.
To address claim frequency and severity, Risk Strategies recommends:
- Lowering medical treatment costs through effective contracting.
- Setting accurate outstanding claim reserves.
- Establishing a nurse line or other vendor triage services to quickly respond to work-related injuries; this sometimes can prevent a claim altogether or reduce claim severity.
- Developing a robust return-to-work program.
Risk Strategies said controlling medical treatment is the, “single most effective strategy to manage workers’ compensation claims. Whether the claim is medical only or indemnity, the medical treatment received by the injured worker is typically the cost driver for the claim.”
While most employers have return-to-work programs in place, many lack the necessary logistics or protocol for an injured or sick employee’s timely return to work.
According to Risk Strategies, these employers may lack:
- Documented, detailed, or current alternative duty jobs.
- Ability to accommodate work restrictions.
- Manager support for adaptive work arrangements.
- Staff or specific processes to maintain contact with injured employees.
Risk Strategies said return-to-work barriers expose process gaps and often result in the inability to meet productivity goals, lower morale within teams, and increased insurance costs for the organization.
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