Will the workers’ comp market remain resilient in 2023?


“We saw a long-term trend of workers’ comp continually getting better. Frequencies has come down for many, many years now, while employer safety has improved consistently. But then we were hit with this very dramatic shock, something that impacts where people work and how people work,” Pulkstenis told Insurance Business.

EMC Insurance, a property and casualty insurer based in Des Moines, Iowa, has more than 110 years of experience in workers’ compensation insurance. But the pandemic has brought unprecedented changes to the labor landscape.

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How has the pandemic affected workers’ comp?

One silver lining is that remote working has led to a reduction of workers’ comp claims. “We’ve seen fewer slips and falls in the workplace, and fewer drivers on the road mean potentially fewer auto accidents from drivers,” said Erin Stober (pictured below), assistant vice president of casualty underwriting at EMC Insurance.

However, industries like aviation, transportation, retail and manufacturing that couldn’t easily embrace remote work are still greatly exposed to workplace injuries and other claims. Longer working hours in some of these industries due to high demand also put workers at risk of overexertion.

The Great Resignation, a well-documented spike in workers resigning from their jobs amid the pandemic, also prompted stronger hiring efforts within organizations. New employees present a significant exposure for businesses, as these workers must quickly learn to navigate unfamiliar environments without enough safety training.

“I don’t think that things have completely settled out yet [after the pandemic]. We’re not quite at a steady state. I think employers are still trying to figure out where this all leads,” said Pulkstenis.

Inflation is also adding to the “uncertain environment” in workers’ comp. Wages and medical costs are increasing along with the cost of goods, driving rates up.

“Premiums are increasing as a result of the different dynamics despite more people staying home and the frequency of injuries going down. Wages are going up and the risk profile has changed. We also anticipate medical costs to increase, just like other costs are increasing. There’s an offsetting effect with those two factors.”

What is the forecast for workers’ comp in 2023?

Despite the complex dynamic in the workers’ compensation space, EMC Insurance believes the market will remain strong in 2023. It also remains one of the most profitable segments of the US property and casualty insurance industry.

Last year marked an eighth consecutive year of underwriting profitability for the workers’ compensation sector. Data from the National Council on Compensation Insurance (NCCI) showed the combined ratio for private carriers was at 87% in 2021, the same ratio as in 2020 and only slightly higher than in 2019.

“We certainly still see the workers’ compensation system is doing very well, and we expect that trend to continue despite these other market pressures,” said Stober. “We continue to work hard with our policyholders and agency partners to reduce the potential workers’ compensation claims through services to help establish safe workplaces.”

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“The workers’ comp market was healthy going into the pandemic, and we still believe that the workers’ comp market will be healthy going forward,” Pulkstenis agreed.

One way for agents and brokers to help their clients navigate rate increases in workers’ comp is to encourage them to improve their risk management. EMC Insurance provides various services and resources for organizations to cut down on claims.

“Our mission is to improve lives and workers comp is front and center to that. We’re working through our independent agents to impact the lives of employers and employees,” Pulkstenis told Insurance Business.

For Stober, EMC Insurance is less focused on market uncertainties. “The opportunities in the workers’ compensation market, as well as the services and solutions EMC brings to the conversation, can’t be overstated,” she said.

What are your thoughts on the state of the workers’ compensation market? Share them in the comments below.


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