The 91% Signal: NCCI 2025 Combined Ratio and Renewals

NCCI (the National Council on Compensation Insurance) dropped two numbers in its 2025 State of the Line. The one everyone quotes is 91%. The one that matters is over 100%.

The 91% is the calendar-year combined ratio, workers' comp's overall profitability score for 2024 (NCCI, May 2025). The number above 100% is the accident-year ratio. That one strips out prior-year reserve releases and shows what underwriting on this year's policies actually looks like. One says the market is still healthy. The other says renewals are about to get harder.

Combined ratio is the simplest profitability metric an insurance line has. Take everything a carrier paid out (losses, expenses, dividends), divide by premium, multiply by 100. Below 100, the carrier made money on underwriting. Above 100, they lost it and were betting on investment income to close the gap.

The wrinkle: calendar-year results average in releases from prior-year reserves. When old claims close cheaper than expected, the released reserve flows back to the current year's results, flattering the headline. Accident-year results strip those effects out. They give a cleaner read of what's happening right now.

The 5-point jump matters more than the level

Most coverage fixates on the 91%. The level isn't the story. Workers' comp combined ratios sat in the 86 to 88% range for several years (NCCI SOL, 2020 to 2024). A brief 91% reading is still profitable by any insurance-industry definition.

The five-point swing from 86% to 91% in a single year is the signal. That kind of move doesn't happen for one reason. It happens when frequency stops falling fast enough to compensate for severity, when expenses rise, and when rate adequacy starts to compress. Rate adequacy is the gap between filed rates and actual loss costs. All three trends show up in the same NCCI release.

The accident-year number is what to watch

When the accident-year combined ratio crosses 100%, it means policies underwritten in 2024 don't pay for themselves on their own merit. Whatever favorable development carriers got from older claim years masked the underlying problem on the new business.

That favorable development is finite. Reserve releases happen because reserves were set high in years past. Once a book has wrung out the cushion, future calendar-year results converge on the accident-year reality. Carriers know this. Renewal pricing tends to reflect it before the headline numbers do.

What it means for contractors at renewal

In our reviews of Southeast contractor renewals over the past few years, two patterns tend to follow a release like this one. Rates hold flat or rise modestly on accounts viewed as average. Carriers get more selective on accounts with elevated mods, recent severity, or volatile loss history. The pricing flexibility that defined the past five soft-market years won't be there for accounts that need it most.

If your mod sits at or above 1.10, the next renewal cycle will feel different. Carriers don't telegraph this. It shows up in quote-to-bind ratios and in which markets quietly stop offering.

What an audit would check

An audit doesn't change the market. What it does is make sure the mod you bring to that market reflects accurate underlying data. That means classifications aligned with the work actually performed. Claim values on your worksheet matching the carrier's current records. Reserves still inside your experience period that haven't drifted from reality. Most contractors we review have at least one of these in their worksheet. Most don't know it.

A clean worksheet won't lower the market rate. It can lower the mod you're multiplying against it. Send us your NCCI worksheet before your renewal and we'll review it for free.