The Virginia State Corporation Commission approved NCCI’s voluntary market loss cost filing on April 1, 2026, reducing advisory loss costs by 7.7 percent and cutting assigned risk market rates by the same amount. The filing is based on Policy Year 2022 and 2023 experience evaluated at year-end 2024, and it follows a 12 percent decrease approved in December 2024.
NCCI attributes the reduction to continued frequency improvement in lost-time claims, moderate medical severity under Virginia’s fee schedule, and a payroll base that has grown faster than indemnity benefit indexation. The decrease applies uniformly across classification codes.
Who it affects
Virginia-domiciled self-insured employers, public entity self-insured groups, and members of the Virginia Association of Group Self-Insurance Funds (VAGSIF) are the primary audience. Large individual self-insureds in construction, trucking, healthcare, and manufacturing rely on NCCI loss costs as the benchmark for their own pure premium calculations, even when they file their own experience-rated plans. Hospital systems and public entities with Virginia exposure will feel it in the 2026 funding calculation; group funds will see it in the member assessment.
The reserve mechanism
The most direct reserve impact is on the expected claim ratio (ECR), the assumption an actuary uses to project ultimate losses on immature accident years under the Bornhuetter-Ferguson method. If your 2026 ECR was anchored to 2024 or 2025 loss costs, it is now stale by roughly 18 percentage points cumulative (the 12 percent 2024 decrease stacked with the current 7.7 percent). Carrying a stale ECR into an immature year pushes IBNR higher than the filed rate environment supports, which can produce unnecessary reserve strengthening when subsequent evaluations pull the estimate back toward the filing.
The more interesting signal is what the filing implies about frequency development patterns. NCCI cites a sustained decline in lost-time claim relativity to premium, a trend that has held for roughly eight years in Virginia. If that decline is real and not an artifact of payroll inflation, then the paid loss development factors (link ratios) derived from accident years 2015 to 2019 may overstate ultimate paid losses for accident years 2022 and later. The standard response is to recalculate selected link ratios using only the most recent five accident years, or to apply a frequency adjustment to historical patterns in the workers’ compensation triangle.
On the indemnity side, payroll inflation outpacing benefit indexation creates a reserve tension: the average weekly wage continues to rise while the maximum compensation benefit is capped. For claims on younger, higher-wage workers, indemnity severity will compress relative to payroll, reinforcing the loss cost decrease. For claims on claimants at or near the maximum, severity is flat in real terms.
What to ask your actuary
- Does our Policy Year 2026 Virginia ECR reflect the cumulative 18 percent loss cost decrease across the last two filings, or are we still using an assumption anchored to 2023 or 2024 rates?
- If lost-time frequency has declined for eight consecutive years, should we trim the older accident years out of our selected paid link ratios, or apply an explicit frequency adjustment?
- Has the medical fee schedule trend been reflected in our paid-to-incurred ratio assumption for the tail, or are we still assuming pre-fee-schedule medical inflation?
What to watch next
NCCI’s mid-year analysis of Policy Year 2024 data, typically released in late summer, will confirm whether the frequency decline observed through year-end 2024 continued into 2025 or whether a portion of the reported improvement reflects payroll-base distortion during the post-pandemic wage run-up. A reversion in the 2024 numbers would complicate the case for further loss cost decreases in 2027 and argue against aggressive ECR cuts now.