WCRI Notes and Takeaways: Why Workers’ Comp Is Profitable but Not Growing

At this conference, I attended a session presented by Bob Hartwig, Ph.D., Director of the Risk and Uncertainty Management Center and Clinical Associate Professor of Finance at the University of South Carolina. The presentation stepped back from day to day claims and focused on the bigger economic picture shaping workers’ compensation.

It was one of the more important sessions to understand because it reframed how the industry is performing today and where it is likely headed next. The core message was simple, but not obvious: workers’ compensation is one of the strongest performing lines in insurance right now, but it is not growing. That tension between profitability and stagnation showed up repeatedly throughout the presentation.

Workers’ Comp Is the “Calm” in a Volatile Insurance Market

One of the most striking takeaways was how differently workers’ compensation has behaved compared to the rest of the property and casualty insurance industry. While other lines have been hit by catastrophic losses, litigation pressures, and inflation, workers’ comp has remained relatively stable.

As Hartwig described it, the broader industry has experienced a “decade of woe,” driven by catastrophe losses, legal system abuse, and inflation, while workers’ compensation has been “kind of a calm and stable refuge” from an underwriting perspective.

That stability has translated into strong profitability. As Hartwig noted, over the past fifteen years, workers’ compensation has moved from being “an underwriting disaster” to “one of the best lines that’s out there.”

The Surprising Reality: Growth Has Stalled

Despite strong performance, workers’ comp has not kept pace with the rest of the industry. Premium growth has been essentially flat for years. Hartwig pointed out that workers’ comp has experienced “negative net growth of about two percent over the past decade,” while commercial lines overall have grown dramatically. In relative terms, the line has shrunk.

Workers’ comp once made up around seventeen percent of commercial insurance premiums. Today, it is closer to ten percent. That does not mean the line is less important. But it does mean its influence on the broader insurance market is declining.

Why Workers’ Comp Didn’t Follow the Hard Market

One of the more interesting explanations from the session was why workers’ comp did not experience the same rate increases as other lines.

It did not need to.

As Hartwig explained, workers’ comp “didn’t need to participate” in the hard market because underwriting results were already strong. This ties directly into what we saw in the Claims Cost session, where costs are rising, but not yet forcing the kind of rate reaction seen in other lines.

Economic Slowdown Is Starting to Matter

Looking ahead, one of the biggest themes was economic deceleration. The broader economy is slowing, and workers’ comp is closely tied to that trend. Premium growth is expected to drop to around three to three and a half percent, much lower than recent years. At the same time, job growth has slowed significantly.

Hartwig highlighted that recent job creation levels are among the weakest outside of recession periods, and much of that growth is concentrated in a single sector. He emphasized, “if you remove employment growth in the health care sector, there is no growth in employment in the United States.”

That concentration creates risk. Workers’ comp exposure depends on payroll and employment. If job growth slows, exposure growth slows with it.

The Labor Market Is Sending Mixed Signals

One of the more nuanced parts of the presentation focused on the labor market. On the surface, unemployment remains relatively low. But underneath, there are signs of strain.

Hiring has slowed, layoffs are beginning to increase, and it is taking longer for people to find jobs. At the same time, wage growth is moderating, and benefit costs, particularly health care, are rising sharply.

This creates a more complex operating environment for employers and insurers alike.

AI: Threat, Opportunity, or Both?

AI was another major topic in the presentation, but the perspective was more balanced than many headlines suggest. There is a lot of concern about job loss. But the data presented did not support a widespread collapse in employment. Total employment and wages continue to grow, even in areas with high AI exposure. The more realistic impact is a shift in the labor market. AI is more likely to augment experienced workers while making it harder for entry-level workers to enter the workforce.

As Hartwig noted, “AI is not simply automating jobs, but it is augmenting the productivity of experienced workers.” There are also upside opportunities. Massive investment in data centers and infrastructure is creating new construction and energy-related exposures, which is positive for workers’ comp.

This connects with themes from the Complexity of Workers’ Comp session, where AI was discussed not just as a tool, but as a source of new regulatory, operational, and workforce challenges.

What This Means for Employers

For employers, the takeaway is not urgency. It is discipline.

Workers’ compensation is stable and predictable right now. But that stability is not automatic. It is the result of consistent execution over time.

As economic growth slows, exposure growth will follow. That may reduce upward pressure on premiums, but it also means fewer tailwinds supporting results. At the same time, underlying pressures like medical costs, workforce shifts, and changing job dynamics are still present.

This is where intentionality matters.

Employers who continue to execute on injury management best practices such as early reporting, directing care, strong communication, and return to work will be best positioned to maintain predictable outcomes. Those who become less disciplined in a stable environment risk seeing results deteriorate even if the broader system appears strong.

The advantage in this market phase, and every market phase, goes to consistency and intentionality with the implementation of injury management best practices.

What Matters Going Forward

The biggest takeaway from this session is that workers’ compensation is entering a different phase.

It is no longer defined by volatility or crisis. It is defined by stability, but also by slower growth and increasing external pressure. Economic conditions, labor market dynamics, health care costs, and technology shifts will all shape what happens next.

The line may not be growing as quickly as other parts of the insurance industry. But it is performing well. And that combination creates a different kind of challenge.

The question is no longer how to fix a broken system. It is how to adapt a stable system to a changing world.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Injury Management Results (IMR) Software: https://imrsoftware.com/

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