Workers' Compensation Insurance Industry Outlook

Topics: Workers' Compensation

Summary: What’s ahead for the workers’ compensation insurance industry? In the 2021 Executive Insights Report by Insurance Business America, AmTrust’s Matt Zender shares his thoughts regarding some of the major factors that could influence the workers’ comp market.

As the world begins to emerge from the COVID-19 pandemic, the changing workforce, new technology, the growth of safer work environments, and more continue to transform the workers’ compensation market.

AmTrust’s Matt Zender, SVP, Workers’ Compensation Strategy, contributed his thoughts regarding the workers’ compensation market and what’s ahead for the industry in Insurance Business America’s 2021 Executive Insights Report. He states, “The workers’ compensation space has proven to be very resilient over the last several years. Historical cycles haven’t manifested as routinely as they usually do. Some of this is attributable to advances in technology. Some is attributable to changing demographics and safer work environments.”

A Positive Workers’ Compensation Industry Outlook

At the National Council on Compensation Insurance’s (NCCI) recent conference, Annual Issues Symposium (AIS), several key players in the workers’ compensation industry also shared metrics and insights for what’s ahead. Overall, net written premium declined 10% in 2020, but other financial metrics are at near historic highs, such as reported combined ratios and the operating margin.

workers' compensation insurance

It’s predicted that the workers’ compensation market will remain stable throughout 2021. Workers’ comp premium changes turned positive in the most recent three quarters, and workers’ compensation continues to be the most profitable of all the property and casualty lines of business.

Factors Influencing the Workers’ Compensation Market

Recovery from the COVID-19 Pandemic

The long-term effects of the coronavirus pandemic are still being determined. For example, one outcome has been an increase in telehealth services that is expected to continue even as COVID-19 cases keep declining throughout the country. Additionally, the lasting impact of the virus related to employee health and wellness is still not known.

“Health and safety have been placed under pressure as the capacity to avoid a traditional workers’ compensation injury has been somewhat temporarily displaced by efforts to reduce and prevent exposure to COVID-19. Whether this will result in an increase in claims due to a lack of focus is not known,” Zender said.

While the pandemic did not have the initial impact on claims it was thought to have, and COVID-19 insured losses in the property and casualty industry have been far lower than early predictions, it’s not yet certain what the effects will be on the industry overall. NCCI estimated that COVID-19 would add approximately two to three points to the overall 2020 accident year combined ratio.

A Shift in Workplace Demographics

The COVID-19 pandemic brought dramatic changes to all aspects of our lives, including shifts in employment and workplace demographics. Many younger workers were laid off early in the pandemic, while older workers found themselves facing an unexpected early retirement.

The U.S. Bureau of Labor Statistics reports that despite the changes the pandemic brought, the labor force will continue to age, with workers over the age of 55 increasing from 21.7% in 2014 to nearly 25% by 2024. Although older workers tend to file fewer workers’ compensation claims, when they do file them, the costs tend to be higher due to the severity of the injury.

Emerging Technologies

“Insurers are seeing the value of Big Data and how they can use this to influence claims, underwriting and operations. By applying their own and industry data, the insurance community can improve what we can extend to our policyholders,” Zender explained.

Insurers can make better use of technology to help improve their workers’ comp offerings. Major advancements in workers’ compensation technology, such as the use of videoconferencing for risk management, virtual claims assessments and telehealth services, and the use of wearable devices, can all help create safer work environments.

Safer Workplaces

Increasing loss control efforts by effectively managing the individual risks an organization face helps create a safe work environment. By reducing workplace accidents and employee injuries, businesses see a reduction in their workers’ compensation claims and premiums.



Companies should continue to focus on creating workplace safety programs to save on the direct and indirect costs of workers’ compensation claims, including medical expenses, litigation costs, repairs to equipment, workplace disruption and more. Additionally, these safety plans can help increase employee productivity and improve customer service within the organization.

The Gig Economy

More Americans continue to earn income outside of a traditional 9-5 job, enjoying a more flexible schedule or the extra money the gig economy provides. These workers represent a diverse pool of professional skills, backgrounds and experiences and offer everything from rideshares and home repair to knowledge-based services like writing, marketing and accounting. Freelance or gig workers increased from around 53 million in 2014 to 59 million in 2020, and this number is expected to continue to grow.

Most gig economy workers are classified as independent contractors, not employees. They do not receive benefits, insurance options, retirement plans, and payroll taxes are not deducted from their paychecks. To be classified as an employee, a business needs to provide workers’ compensation insurance coverage, unemployment and health insurance, as well as social security and Medicare benefits. As more Americans shift to the gig economy, payroll in the workers’ comp system will decrease over time.

Workers’ Compensation Coverage from AmTrust

AmTrust Financial has been a trusted partner for Workers’ Compensation coverage and other lines of small business insurance for over 20 years. Our Loss Control department offers customized risk management plans to help reduce workplace accidents and injuries that could lead to a claim. For more information about our small business insurance options, please contact us today.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.
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