NCCI Chief Actuary Donna Glenn presented the 2025 State of the Line at the Annual Insights Symposium on May 12, 2026, confirming that private-carrier workers’ compensation posted a 91% calendar year combined ratio in 2025. That marks the 12th consecutive year of underwriting gains. But the accident year combined ratio landed at 102%, crossing 100% for the first time during this profitability cycle. The entire 11-point gap between the two numbers comes from favorable development on prior accident years.
Who It Affects
Self-insured employers carrying workers’ compensation retention in NCCI-filing states (38 states plus DC). Large manufacturers, health systems, municipalities, and school districts that benchmark expected loss ratios to industry data. Captive and pool managers who use NCCI’s State of the Line as a reasonability check on reserve assumptions.
The Reserve Mechanism
The calendar year combined ratio includes the release of reserves from older accident years that proved redundant. The accident year combined ratio isolates the cost of claims occurring in 2025 against the premium earned to cover them. When the accident year number exceeds 100%, current claims cost more than current premiums collect.
For self-insured programs, the distinction matters because most retain their own risk and do not benefit from the pooled reserve cushion that keeps the insured calendar year result below 100%. A self-insured employer’s experience reflects something closer to the accident year picture.
Three specifics drive the gap:
Severity is outrunning rate relief. Medical and indemnity severity each grew roughly 4% in 2025, on top of 6% growth in 2024. Meanwhile, NCCI bureau rate changes averaged approximately a 6% decrease, continuing a multi-year downward trend. The premium base contracted 0.2% in net written terms. Current-year claim costs rose while the funding base shrank.
The reserve cushion is finite. NCCI estimates industry reserve redundancy at $14 billion, down from $16 billion a year earlier. That pool has been releasing favorable development for over a decade, primarily from accident years 2018 and prior. As those years mature, the annual release narrows. Self-insured programs that anchor their expected loss ratio to calendar year benchmarks effectively borrow from a cushion they do not own.
Frequency deceleration is slowing. Lost-time claim frequency declined 2% in 2025, a materially slower pace than the 5% decline in 2024 and the long-term average. A smaller frequency dividend means severity has to be offset by rate, not volume.
What This Means for Your Next Review
If your actuary selects an expected claim ratio for recent WC accident years using calendar year industry benchmarks, the starting point is roughly 11 points too low relative to the actual accident year cost level. Ask whether the a priori loss ratio in your Bornhuetter-Ferguson or Cape Cod projection reflects the 102% accident year reality or the 91% calendar year headline. The difference flows directly into IBNR for the two or three most recent, least mature accident years where the method’s prior expectation carries the most weight.
For the next reserve study or interim monitoring discussion, put three questions on the agenda:
- Is our expected loss ratio benchmarked to calendar year or accident year industry data, and by how much does the choice change our IBNR?
- How many more years of favorable prior-year development should we assume, given the $14 billion redundancy is shrinking?
- Has the slowdown in frequency decline changed our net loss cost trend assumption for the current accident year?