Workers'Compensation
Premiums
Strong wage growth
Rate increases in response to claims costs
Lower yields place further pressure on rates
GWP grew 18% in FY25, supported by strong wage growth and premium rate increases, continuing the trend of the last five years. Premium rates reflected adverse claim trends and increases in recommended rates from regulators.
Claims
Psychological claims increasing in frequency and duration
Strong increases in avg claim size
Moderate prior year strengthening
The reported net loss ratio increased by 5 points to 79% in FY25, largely driven by deterioration from yield curve changes and prior period reserve strengthening. The underlying net loss ratio increased by around 4 points, due to strong increases in average claim sizes more than offsetting premium rate increases.
5 points worse than FY24
Profitability
Premium and wage growth
Rising claim costs
Support from investment returns
Despite rising claim costs, profitability remained strong in FY25 due to premium growth and investment returns. Whilst still a strong result in FY25, the net COR rose over the year resulting in a lower ROE than FY24.
5 points worse than FY24
FY26 Outlook
We expect profitability to remain strong in FY26, supported by continued earned premium growth and rate increases. Whilst continued average claim size increases and reducing investment returns will place pressure on margins, we expect this class to perform within target ROE range.
Meet the contributors
Andrew McInerney
Workers’ Compensation
Francis Beens
Workers’ Compensation
Patrick Zhang
Workers’ Compensation