Tempered Medical Inflation Keeps Lid on Index

NCCI reported last week that its Workers Compensation Weighted Medical Price Index remained near its recent lows in the second quarter due to moderating price growth for physician and hospital services.
Physician care price growth continued to moderate from last year’s elevated levels.
Fee schedules and Medicare-based pricing remained important factors. States without fee schedules may be experiencing higher price growth as physician care prices for private insurance and other payors have grown faster this year than those for Medicare and Medicaid.
Drugs and medical equipment, the two categories that will be directly affected by tariffs, have yet to see any meaningful changes in price growth. Direct pharmaceutical tariffs have been announced but not yet implemented, potentially further delaying the impact to medical prices overall.
Long-term care price growth remained elevated and may continue to contribute to
higher costs for longer-duration claims.
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Old Republic last week said its Workers’ Comp unit continued to have strong favorable development and accounted for the majority of the group’s Specialty Insurance total favorable development.
Old Republic reported stronger-than-expected earnings for the second quarter of 2025, with an earnings per share of $0.83, toppings analysts’ forecasts of $0.81 per share.
Workers’ comp net premiums written were 2% lower in the second quarter, while the loss ratio came in at 48.5% compared to 50.7% last year.
“We saw rates stay relatively flat this quarter, while loss frequency trend continues to decline and loss severity trend remains stable. So here, given the higher wage trend within payroll, which is what we apply our rates to, and given the declining loss frequency trend and stable loss severity trend, we think our rate levels for workers’ compensation remain adequate,” Craig Spetty, President and CEO, Old Republic International, told analysts on a post-earnings conference call.
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