NCCI’s Annual Insights Symposium opens May 11 in Orlando with the workers’ compensation industry’s most-watched data release: the State of the Line report. Chief Actuary Donna Glenn will present full-year 2025 results on May 12, updating the benchmarks that actuaries use to validate self-insured WC reserve assumptions. Three signals from NCCI’s preliminary 2024 data and April 2026 supporting reports deserve attention before that presentation.
Who It Affects
Self-insured employers carrying workers’ compensation retention, particularly those in states where NCCI files (38 states plus DC). Large manufacturers, health systems, school districts, and municipal pools that rely on NCCI benchmarks to calibrate expected loss ratios and development patterns should treat the May 12 release as a data trigger for their next reserve discussion. California employers (where the 2024 combined ratio hit 127%) and New York employers face additional state-specific severity pressure.
The Reserve Mechanism
Signal 1: Severity is eating the frequency dividend. NCCI’s accident year 2024 data shows lost-time claim frequency declined 6% versus 2023, but indemnity severity rose 5% and medical severity rose 6%. When severity growth exceeds frequency decline, net loss costs increase. For self-insured programs using a Bornhuetter-Ferguson approach on recent accident years, the expected claim ratio selected two or three years ago may now be too low. The industry’s calendar year 2024 combined ratio of 86.1% masks this emerging-year pressure because it includes favorable development from older accident years.
Signal 2: Favorable development may be peaking. The WC industry released $6.4 billion in favorable reserve development in calendar year 2024, a cushion that offset $15.8 billion in adverse development across other casualty lines. That redundancy comes from accident years 2018 and prior, where frequency declines exceeded expectations. As those years fully mature, the source of future releases narrows. If 2025 data shows favorable development shrinking, self-insured programs that have been allowing actuarial tail factors to ride on observed industry redundancy will need to revisit those assumptions.
Signal 3: Payroll volatility undermines exposure bases. NCCI’s April 2026 labor market report shows private-sector employment growth averaged just 79,000 jobs per month over the three months through March 2026, a sharp deceleration from prior years. For self-insured WC programs that project ultimates off payroll exposure, a sudden hiring slowdown means fewer claims but also less premium base to fund existing liabilities. Actuaries using loss rate methods (losses per $100 of payroll) may find the denominator unreliable for projecting recent accident years.
NCCI’s April Medical Inflation Insights report adds a fourth concern: early 2026 WC medical price moderation is “unlikely to be sustained” and should revert to 2024-2025 trend levels. That caution argues against lowering medical severity trend selections based on a single quarter of favorable data.
What to Ask Your Actuary
- How does our WC frequency and severity experience in accident years 2023-2025 compare to the NCCI State of the Line benchmarks, and has the gap between our program and industry widened?
- Are we still carrying reserve redundancy from accident years 2019 and prior, and if industry favorable development shrinks in the May 12 release, should we compress our tail factors?
- Given NCCI’s flagged payroll volatility, what sensitivity does a 10% payroll shortfall have on our loss rate projections for the current accident year?
What to Watch Next
The actual State of the Line presentation on May 12 will contain full-year 2025 frequency, severity, and development data. If medical severity growth exceeds 6% or favorable development drops below $5 billion, self-insured employers should schedule a mid-year reserve review before year-end actuarial opinions lock in assumptions. The economy session the same afternoon (Stephen Cooper, 1:00 p.m. ET) will address tariff impacts on WC medical equipment costs, a forward-looking driver that NCCI’s April report already flagged as accelerating.