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NC Fares Well in recent Premium Rankings

Eighteen of 51 jurisdictions in the U.S. had lower workers’ compensation premium rates than North Carolina in 2024, according to a widely followed report from Oregon’s department of consumer and business affairs. The Oregon Workers’ Compensation Premium Rate Ranking is released every two years.

North Carolina continues to maintain its middle-of-the-pack position and indeed improved it marginally in 2024. In 2022, 21 states had lower premium rates, compared to 2020 when 20 jurisdictions had lower rates. Ten years ago, 24 states had lower premium rates than North Carolina.

According to the most recent report, the following southern states had lower premium rates than North Carolina: Arkansas, Virginia, Kentucky, Tennessee, Maryland, and Mississippi. Workers’ compensation premium rates tend to be lowest in North Dakota, West Virginia, and Arkansas, while rates tend to be highest in Hawaii, New Jersey, New York, and California.

The national median index rate has fallen steadily over the last 25 years or so, from a high of $4.35 per $100 of payroll in 1994 to $1.09 per $100 of payroll in 2024. This is the lowest median value since the inception of the study in 1986, and is one quarter of the nation’s peak median rate of $4.35, in 1994.

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Oregon uses a methodology that controls for interjurisdictional differences in industry compositions. The study compares premium rates for the same set of industry classes across all jurisdictions, after weighting by the industry payroll in Oregon, to arrive at a normalized premium index rate that reflects differences in premiums.

There are many reasons why premium rates vary among jurisdictions: insurers’ administrative costs are constrained by regional market forces; taxes and assessments are imposed at different rates and use different bases; and accidents and illnesses occur at varying rates as natural and random processes. Even so, the report notes, the middle 50 percent of jurisdictions’ index rates remain highly competitive with an average difference of just $0.02 between ranks.

Separately, on August 30, 2024, the North Carolina Rate Bureau filed for a decrease of 5.2% from loss costs approved effective April 1, 2024. The new rates became applicable to new and renewal policies on and after April 1, 2025. By industry group, the changes are: Manufacturing 2.6% decrease; Contracting 5.0% decrease; Office & Clerical 8.0% decrease; Goods & Services 6.2% decrease; and Miscellaneous 4.7% decrease.

The National Council on Compensation Insurance also reported continued good news in its 2025 State of the Line Guide. The 2024 calendar year combined ratio for workers’ compensation is 86%, a sign of underwriting strength for the system, while the 2024 accident year combined ratio is 99% with prior years continuing to experience downward reserve development. NCCI estimates a redundant industry reserve position of $16B, and reports lost-time claim frequency declined by 5% in 2024, a faster pace of decline than the long-term average.