Workers’ compensation remains one of the most profitable lines in US property and casualty insurance. But with premiums flat and rates falling in many states, an employer’s own safety record is becoming more important in what it pays.
The line is heading for its 12th consecutive year of underwriting profit, with a forecast 2026 net combined ratio of 92.7, according to the latest projections from the Insurance Information Institute (Triple-I) and Milliman. Net written premium is forecast to fall 0.7% in 2026 and stay broadly flat through 2028. Donna Glenn, chief actuary and product officer at NCCI, said 2026 premium is likely to come in slightly below 2025 levels.
State-level data shows the same trend. In Minnesota, the state’s average pure premium rate for 2026 is 44% below 2004 levels, and its assigned risk plan will cut average premium levels by 3.8% from January 1, 2027.
When base rates are falling across the market, the gap between what different employers pay increasingly comes down to their individual experience. For employers large enough to qualify for experience rating, the experience modification factor (mod) is the main mechanism. It compares an employer’s actual claims with those expected for businesses of its size in its industry. A mod of 1.0 is average. Below 1.0 earns a credit on premium, and above 1.0 brings a surcharge.
Because the mod is usually based on three years of claims data, excluding the most recent year, safety improvements made today take time to show up in pricing, and so do poor results. Claim frequency typically affects the mod more than one large claim, which gives employers a strong incentive to prevent smaller, more common injuries.
Mods also matter outside the insurance transaction. General contractors and public entities often set mod thresholds for bidding, so a high mod can cost a contractor work as well as premium.
Federal penalties for safety violations remain at record levels. OSHA’s maximum penalties for 2026 have been held at 2025 levels: $16,550 per serious or other-than-serious violation, and $165,514 per willful or repeated violation, after the annual inflation adjustment was cancelled this year. Failure to correct a cited hazard can cost up to $16,550 per day.
These penalties aren’t insurable under a workers’ comp policy, but a pattern of violations can affect an employer’s ability to get competitive cover.
In a soft comp market, carriers compete harder for well-run accounts. Brokers who can show an employer’s safety program, claims management and return-to-work practices are in the best position to secure credits beyond the mod, such as schedule rating credits where states allow them.
There are several practical steps. Brokers should review clients’ mod worksheets each year to check for errors in payroll classification or claims data, since mistakes are common and can be corrected. They should also encourage early reporting of injuries and active claims management, which keep claim costs down and limit their effect on the mod.
For clients with mods above 1.0, a documented plan to improve safety, ideally with measurable results, gives underwriters a reason to look beyond the numbers.
The opportunity is time-limited. Rate cycles turn, and the current softening reflects years of strong results that may not last. Employers who use the soft market to build their safety records will be better placed when conditions tighten again.
