While nearly every NCCI jurisdiction is cutting workers’ compensation loss costs this cycle, Tennessee is going the other way. NCCI filing TN-2026-04 proposes a 4.8% overall average voluntary loss cost increase, and a matching 4.8% assigned-risk rate increase, for new and renewal policies effective October 1, 2026. The driver is not experience: this is a “law-only” filing that translates the state’s April 1, 2026 medical fee schedule update into loss cost dollars. The figures were filed with the regulator but not yet approved when the circular published.
Set that against the national picture. In NCCI’s 2026 State of the Line, the line posted a 91% calendar-year 2025 combined ratio, net written premium slipped 0.2% to $41.6 billion, and approved filings are expected to cut written premium by roughly 5.0% on average from 2025 to 2026. State filings this cycle ran from a 15.6% decrease to a 21.6% increase, with decreases in nearly every jurisdiction. Yet both medical and indemnity claim severity each grew about 4%. The soft market is a frequency-and-premium story; severity never stopped climbing. Tennessee’s filing simply makes that severity visible on the benchmark.
Who it affects
This is a signal for self-insured Tennessee employers and their captives: manufacturers, logistics and distribution operators, hospital systems, and public entities that retain workers’ comp risk in the state. They do not buy the NCCI loss cost, so the filing does not bill them directly. But the loss cost is the industry’s own estimate of expected loss per unit of payroll, and it is the cleanest external benchmark a self-insured has for whether its own expected claim ratio (ECR) is keeping pace.
The reserve mechanism
A fee-schedule-driven increase reads differently than a frequency-driven one. Frequency changes flow through claim counts you can already see in your triangle. A reimbursement schedule step-up raises the dollars attached to every open and future medical claim at once, including claims already in inventory, and it does so before your paid data reflects it. Self-insureds who peg their ECR to the prior loss cost level, or who set medical trend off two-year-old paid triangles, will carry a stale medical assumption into the October reset and under-reserve the medical piece.
The subtlety is decomposition. The 4.8% is mechanical: it prices the schedule change, not underlying utilization. Your own medical trend should layer utilization and mix on top of the fee change, not substitute one for the other. Treating the 4.8% as your total medical trend understates the risk; ignoring it because “it’s just the fee schedule” understates it too.
Where this shows up in your reserves
Look at the medical column of your Tennessee workers’ comp development triangle and your open-claim medical case reserves. If case reserves on active medical claims were set at pre-April reimbursement levels, they are now light against a higher schedule, the same case-adequacy gap that surfaces whenever a state steps up its fee schedule. On the reserve summary, it lands in the medical ECR and the medical tail factor, not indemnity. Tennessee follows New York, Missouri, and Kentucky as fee-schedule mechanics reprice medical benchmarks, and it joins Nevada as one of the few increases breaking the national soft-market pattern that produced cuts like Virginia’s 7.7% drop.
What this means for your next review
Put three items on the agenda. Confirm your Tennessee medical trend assumption reflects the April fee schedule step-up rather than the prior benchmark. Ask your actuary how much of the 4.8% is mechanical fee change versus underlying utilization, and which part belongs in your ECR. And review case adequacy on open Tennessee medical claims against the new reimbursement schedule before year-end. Watch whether the regulator approves the filing as filed, and whether other fee-schedule-linked states follow with increases that break the national trend.
Decision-maker checklist
- Rebuild your Tennessee medical trend assumption to include the April 1, 2026 fee schedule change, not just experience trend.
- Ask your actuary to split the 4.8% into mechanical fee change and utilization, and reflect only the right piece in your ECR.
- Test open Tennessee medical case reserves against the stepped-up reimbursement schedule and flag any that are now light.
- Compare your own indicated medical trend to the countrywide ~4% severity growth NCCI reported for both medical and indemnity.
- Set a reminder to confirm the regulator’s approved figure once TN-2026-04 clears.