Connecticut workers’ compensation costs will drop again in 2025

Connecticut workers’ compensation insurers are recommending an overall 6.1 percent reduction in loss costs in the voluntary market and an overall 6.2 percent reduction in the assigned risk market for next year.

If the recommendation is approved, it would mark the eleventh consecutive year that loss costs have declined in the state. The rate filing submitted to the Connecticut Department of Insurance by the National Council on Insurance Compensation (NCCI) of insurers anticipates an effective date of January 1, 2025.

NCCI’s 2025 recommendations are based on end-2023 premium and loss experience from the 2021 and 2022 policy years and show improved experience over the organization’s 2024 rate filing, which also recommended decreases.

According to the NCCI document, loss claims in Connecticut have declined moderately over the past year, continuing what NCCI says has been a long-term trend. Despite a small increase in the medical loss rate in the most recent policy year, NCCI said it expects the long-term pattern of declining medical loss rates, as well as indemnity loss rates, to continue into 2025.

The proposed change in allocated risk rates for 2025 reflects a decrease in allocated risk expenses and an increase in allocated risk spreads, NCCI said.

The filing of loss costs in 2025 continues the downward trend of recent years.

For 2024, for Connecticut, NCCI recommended and the insurance department approved an overall 9.8 percent reduction in loss costs in the voluntary market and an overall 10.5 percent reduction in the assigned risk market.

For 2023, the state has allowed NCCI’s proposed overall average change of -3.0% in voluntary loss costs and no change in the assigned risk rate level for 2023.

Workers’ compensation costs also fell in 2022. Voluntary loss costs fell 14.1%, while assigned risk rates fell 8.2%, on NCCI’s recommendation.

Each workers’ compensation insurer must add other costs, including commissions and taxes, to the approved loss costs to calculate the final workers’ compensation rates it plans to charge.

Employers who cannot obtain coverage on the voluntary market may apply for coverage on the assigned risk market.

Nationally, NCCI reports that the combined ratio for calendar year 2023 for workers’ compensation was 86%, a sign of underwriting profitability, where net written premium increased 1%. Frequency continued its long-term decline, while changes in demand severity moderated for 2023.

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Workers’ Compensation Talent Connecticut