If you are a contractor right now, you already know the story with insurance. Commercial auto is a mess. General liability keeps climbing. Umbrella coverage is harder to get and more expensive when you find it. Your insurance costs feel like they only go one direction.
But there is one line of coverage that has been quietly working in your favor for years - and in 2026, it is still delivering. Workers compensation insurance is in one of the longest stretches of declining rates in modern history, and contractors who understand why are in the best position to take advantage of it.
Here is what is happening, why it matters, and exactly how to make the most of this market while it lasts.
While most commercial insurance lines have been hammered by rate increases, workers compensation has moved in the opposite direction. According to NCCI's 2025 state advisory filings, the calendar year 2024 combined ratio for workers compensation came in at just 86% - well below the 100% break-even point. That means carriers are making strong underwriting profits on this line of business.
This is not a one-year blip. Workers comp has posted nine consecutive years of underwriting profitability, with an average combined ratio of 91% from 2015 to 2023 (dropping to 88% in 2023). That kind of sustained profitability creates competition among carriers, and competition means lower prices for you.
The numbers are showing up in state filings across the country:
Nationally, rate reductions in 2025 averaged around 6% across all industries, and according to IMA Financial Group's Q4 2025 market report, the same or greater reductions are expected for 2026.
Three big forces are driving this extended soft market in workers compensation. Understanding them helps you see why this trend has legs - and also where the risks are.
Fewer workers are filing lost-time claims than at any point in the last two decades. Construction sites are safer because of better training, improved equipment, stricter OSHA enforcement, and more effective safety cultures. NCCI specifically cited declining lost-time claim frequency as the primary driver behind the 2026 rate decrease recommendations in multiple state filings.
Even as loss costs decline, overall payroll in the construction sector has grown every year since 2000 (except for three major economic disruptions - the dot-com bust, the 2008 financial crisis, and COVID). Higher payrolls mean more premium volume flowing to carriers, even at lower rates per $100 of payroll. That is a profitable formula for insurers.
According to Insurance Business Magazine, the U.S. P&C industry reported policyholders' surplus of $1.2 trillion for 2025, up from $1.1 trillion the year prior. Carriers are sitting on record capital. In workers comp specifically, AM Best reports the combined ratio has hovered near 90% for the last five years, supported by favorable reserve development from prior years. Carriers have money to deploy, and workers comp is one of the lines they want to write.
A soft market does not mean your rates automatically drop. Carriers are competing for good accounts - but you have to position yourself as a good account to get the best deals. Here is how to do it.
If you have not marketed your workers comp in two or three years, you are probably overpaying. In a competitive market, new carriers will undercut your incumbent to win the business. Work with a broker who will take your account to multiple carriers - not just re-quote with whoever wrote it last year. The difference between a lazy renewal and a properly marketed policy can be 10% to 20% in a market like this.
Your EMR is the single biggest lever you have over your workers comp premium. An EMR of 1.0 is average. Below 1.0 means you are safer than your peers and you pay less. Above 1.0 means you are higher risk and you pay more.
Your EMR is calculated based on your claims history over a rolling three-year period (excluding the most recent year). That means every claim you file today affects your premium for years. The math also hits small, frequent losses harder than large, infrequent ones - so a string of minor injuries can hurt you more than one bad accident.
Strategies that actually move your EMR down:
Many general contractors require subcontractors to carry an EMR of 1.0 or lower just to bid on projects. A good EMR does not just save you on premiums - it keeps you eligible for work.
The longer an injured worker stays off the job, the more expensive the claim becomes. That cost shows up in your EMR for three full years. A structured return-to-work program with modified duty or transitional roles can dramatically cut lost-time costs.
Even if the injured worker is handling light tasks like organizing materials, updating paperwork, or helping with scheduling - getting them back in the mix keeps the claim classified as medical-only rather than lost-time. That distinction alone can save you thousands at renewal.
Generic safety meetings that nobody pays attention to are not going to lower your claims. What works is consistent, trade-specific training that your crews actually engage with:
Safety is not just a compliance checkbox. It is a direct input to your insurance cost.
Workers comp premiums are calculated based on payroll times a rate per $100 for each job classification. If your employees are coded wrong, you are either overpaying or exposing yourself to a nasty audit surprise. NCCI data shows that more than 25% of inspected policies with certain construction class codes had classification errors. Get your class codes reviewed by someone who knows construction - not a generalist.
General liability, workers comp, commercial auto, equipment - we package the whole program for contractors. Apply in about 10 minutes and we will get to work.
Workers comp premiums are driven by payroll. Even if your rate per $100 of payroll goes down, your total premium can go up if your payroll grows faster than the rate decrease. And in construction right now, payroll is growing.
The construction labor market remains tight, with experienced workers retiring, immigration policy constraining supply, and wages climbing to attract talent. If you added crew members or gave raises in the last year, your premium at audit may be higher than your deposit - even with a rate decrease.
Plan for this. Budget based on actual projected payroll, not last year's numbers. And make sure your carrier knows your projected payroll upfront so you are not hit with a surprise additional premium at audit.
No soft market lasts forever. There are already signals that the rate of improvement is slowing. According to USI's mid-year 2025 outlook, reserve redundancy is diminishing, meaning carriers have less prior-year profit to release into current results. Medical cost inflation in workers comp is also picking up, with NCCI reporting a 6% increase in both indemnity and medical claim severity in 2024.
Some states are already seeing the turn. Nevada filed for a 21.9% increase in loss costs for 2026, and California and Washington have also filed for rate increases due to worsening loss activity.
The bottom line: the window is still open for most states and most contractors in 2026. But the time to act is now - not after the market hardens and carriers start tightening up.
Yes, in most states. NCCI has filed rate decreases for 2026 in the majority of states it services. Florida approved a 6.9% decrease, Colorado approved a 6.9% decrease, and Texas approved a 3.8% decrease. National rate reductions averaged around 6% in 2025, with similar or greater reductions expected in 2026. However, some states like Nevada, California, and Washington are seeing increases due to higher claim costs.
Workers comp has been profitable for carriers for nine straight years, with combined ratios averaging around 91% from 2015 to 2023. This profitability is driven by declining lost-time claim frequency, steady payroll growth, and strong reserve positions. Meanwhile, lines like commercial auto and general liability are being hit by social inflation, larger jury verdicts, and rising litigation costs - problems that have not affected workers comp to the same degree.
An EMR of 1.0 is average. Below 1.0 means you are performing better than your peers. Most competitive contractors aim for an EMR between 0.75 and 0.95. Many general contractors require subcontractors to carry an EMR of 1.0 or lower to qualify for work. An EMR of 0.80 means you pay 20% less than the base rate. An EMR of 1.25 means you pay 25% more.
Your EMR is based on a three-year rolling window of claims data (excluding the most recent policy year). That means improvements you make today will start showing up in your EMR calculation roughly two years from now and will continue to benefit you for the full three-year period. The fastest way to see results is to prevent lost-time claims and keep open claims moving toward resolution.
Yes. Workers comp premiums are calculated based on payroll times a rate per $100 of payroll, modified by your EMR. If your payroll increases (more employees or higher wages), your total premium can go up even if the rate per $100 decreases. Rising payroll is the biggest hidden factor in construction workers comp right now - plan your budget accordingly.
Workers compensation is the one commercial insurance line where the market is genuinely on your side right now. Carriers are profitable, rates are declining, and capacity is abundant. But this favorable cycle will not last forever - reserve redundancy is shrinking, medical costs are rising, and a few states are already seeing rate increases.
The contractors who benefit the most from this market are the ones who shop aggressively, maintain clean safety records, keep their EMR low, and work with a broker who knows how to position construction accounts in a competitive market.
If your workers comp has not been marketed in the last two years, now is the time. If your EMR is above 1.0, there is a clear path to bring it down. If you do not have a return-to-work program, start building one today.
This is one of the few pieces of good news in contractor insurance right now. Do not leave it on the table.
The Grit Insurance Group team works with contractors across the country on workers compensation, commercial insurance, and contractor insurance programs. If your policy is coming up for renewal, or if you want a second look at your current program, call us at (801) 505-5500 or visit gritinsurance.com.
Author: Grit Insurance Group | Published: April 2026