Iowa Workers’ Compensation and the Combined Ratio

The Second Amendment

Why Are Iowa Work Compensation Benefits so Low?

The Insurance Journal reported workers’ compensation insurance continues to lead the P&C industry with strong profits. That’s from October 8, 2025. The only way the P&C industry makes a profit is based on denying claims.

The insurance industry makes money by taking premiums and then not paying claims. When have you ever heard an adjuster say, “I can’t pay you what you asked for, because it wouldn’t be enough.” NEVER

“The line remained profitable in 2024 with a combined ratio of 88.8, the lowest among the major property/casualty lines of business, even as net premium written for the industry fell nearly 7% due to the rate decreases and pricing cuts, says Best’s aptly titled market report, “Workers’ Compensation Continues With Strong Profits, Despite Pricing Cuts.”

How to Understand the Combined Ratio

The combined ratio is the profit margin. The combined ration is a measure of the claims versus the amount the company is paying out in relation to the premiums brought in. A combined ratio less than 100 means the insurance company is making a profit. If the combined ratio is 100, then there is no profit. A combined ratio of 88.8 means the company made 11.2% profit on the claims.

That is not all the profit they can make, which is why Warren Buffet bought GEICO. When you make the 11.2% profit you get to keep that money and invest it in stocks, bonds, annuities and any other investments.

When the Iowa legislature literally destroyed the workers’ compensation program of benefits for injured workers, that meant the workers received very little for the loss of earning capacity and the insurers made out like bandits. Claims dropped the money bags where the work comp insurers stowed the dough grew enormously. But that is a game the Iowa Insurance Commissioner would surely notice. And the commissioner did, then lowered the rates the insurers could charge employers. Lowering the rates also lowered the profit margin. But, as you can see the 11.8% profit means no work comp insurer is starving and I am sure the C-suite bonuses, buy-backs and dividend increases are not being reduced.

The legislative tide

Who Actually Does Suffer?

The people in the c-suite aren’t suffering. They are making out like bandits. The workers and their families suffer because they receive fewer benefit dollars at the point in time when they need more to just feed their families. The Iowa Industrial Commissioner carries the Governor’s water by doing what she’s wanted. When it comes to benefits and how much you get, he says no as often as he can.

Yeah, the Iowa Industrial Commissioner is not your friend.

Oh well, short blog today, I have a case to prepare for hearing. Be well and call if you have questions about what you are entitled to after a work injury.