New Jersey 2026 Rate Relief

Understanding the Latest Workers' Compensation Changes and Second Injury Fund Adjustments

The New Jersey Department of Banking and Insurance has approved significant changes to workers' compensation rates effective January 1, 2026, bringing mixed news for employers across the Garden State. While overall rates are decreasing, the Second Injury Fund contribution has increased notably, impacting the bottom line.

Source: New Jersey Compensation Rating and Inspection Bureau (CRIB)

Circular No. 2510 | Issued October 29, 2025 | Effective January 1, 2026

Consult with your insurance professional for the specific impact on your individual policies.

The Big Picture: 4.3% Rate Decrease

New Jersey employers will see an overall 4.3% decrease in workers' compensation and employers' liability insurance rates for new and renewal policies beginning January 1, 2026. This marks a welcome reduction in premiums, though the actual impact varies significantly by industry group.

The approved rate change is based on the latest financial and statistical data, including losses resulting from the COVID-19 pandemic. The Rating Bureau analyzed data from the three most recent complete policy years to arrive at these adjustments.

Industry-Specific Rate Changes

The 4.3% statewide average masks considerable variation across different sectors:

• Manufacturing: -4.4% average change (range: -24.4% to +15.6%)
• Contracting: -3.8% average change (range: -23.8% to +16.2%)
• Office & Clerical: -6.4% average change (range: -26.4% to +13.6%)
• Goods & Services: -2.8% average change (range: -22.8% to +17.2%)
• Miscellaneous: -6.7% average change (range: -26.7% to +13.3%)
• F-Class: -10.6% average change (range: -20.0% to +20.0%)
• Maritime & FELA: -4.6% average change (range: -24.6% to +15.4%)

Of the 544 classifications carrying rate assignments, 141 will experience increased rates, 2 will see no change, and 401 classifications will experience decreased rates.

Second Injury Fund: The Critical Increase

Here's where employers need to pay close attention: the Second Injury Fund contribution has increased to 3.75% from its previous level. This surcharge is applied to the modified premium and represents a mandatory assessment on all workers' compensation policies.

The Second Injury Fund exists to encourage the employment of workers with pre-existing disabilities by reimbursing employers for a portion of workers' compensation costs when a subsequent injury combines with a pre-existing condition to create a more severe disability.

Meanwhile, the Uninsured Employers' Fund surcharge remains at 0.00%, providing no additional cost burden in that area.

Benefit Level Adjustments

New Jersey is also adjusting statutory benefit levels:

Maximum Weekly Benefits:

• Increasing from $1,159 to $1,199 for all injury types except permanent partial disabilities
• For permanent partial disabilities, maximum benefits will range from $320 to $1,199 (previously $309 to $1,159)

Minimum Weekly Benefits:

• Increasing from $309 to $320 for most injuries
• Minimum for permanent partial injuries remains at $35

These benefit increases resulted in a 1.2% premium level adjustment factor.

Executive Officer and Public Official Payroll Changes

Employers must also note updated payroll parameters:

Executive Officers:

• Maximum weekly payroll: $3,430 (up from $3,320)
• Minimum weekly payroll: $860 (up from $830)
• Maximum average annual wage: $178,360 (up from $172,640)

Appointed or Elected Public Officers:

• Board of Education members: minimum $8,940 annually (up from $8,630)
• Other appointed/elected officers: minimum $1,790 annually (up from $1,730)

Experience Rating Updates

The Rating Bureau has revised experience rating parameters for 2026:

• Normal loss values (medical and indemnity): increased from $10,500 to $10,750
• State indemnity limiting value: decreased to $179,000
• Federal indemnity limiting value: decreased to $269,000
• State and Federal medical values: increased to $271,000

These changes affect how individual employer experience modifications are calculated, potentially impacting whether your modification factor increases or decreases.

Minimum Premium and Expense Constant Adjustments

The Minimum Premium Multiplier has increased from 280 to 290, and the Maximum Minimum Premium rose from $1,150 to $1,200. The expense constant per policy is set at $160.

These changes ensure adequate pricing for smaller policies while maintaining rate adequacy across all premium sizes.

What Drove These Changes?

The 4.3% decrease results from several offsetting factors:

1. Experience and Trend: A 12.0% increase due to actual loss experience, offset by a 15.5% decrease from trend factors recognizing changing exposures
2. Benefit Changes: A 1.2% increase due to higher benefit levels
3. Expense Adjustments: A 0.6% decrease from changes to expense provisions
4. Expense Adjustment Factor: A 0.5% increase because certain expense elements won't decrease proportionally

Catastrophe Provisions Remain Stable

Terrorism and other catastrophe provisions remain unchanged:

• Terrorism Premium Charge: $0.03 per $100 of payroll
• Catastrophe Charge (other than certified terrorism): $0.01 per $100 of payroll

Key Takeaways for New Jersey Employers

1. Overall Rate Relief: Most employers will benefit from the 4.3% average rate decrease, with variations by industry classification.
2. Second Injury Fund Impact: The 3.75% Second Injury Fund surcharge will partially offset rate decreases for all employers.
3. Benefit Cost Increases: Higher maximum and minimum weekly benefits reflect New Jersey's continued adjustment to wage levels.
4. Experience Rating Matters More: With revised experience rating parameters, maintaining strong safety programs is increasingly important to securing favorable modification factors.
5. Classification-Specific Changes: Individual classification rates vary significantly—some increase by up to 20%, while others decrease by similar amounts.
6. Payroll Limit Adjustments: Higher executive officer and public official payroll limits mean increased premiums for businesses at those caps.
7. Budget Accordingly: While the headline is a rate decrease, factor in the Second Injury Fund increase and benefit adjustments when forecasting 2026 insurance costs.
8. Review Your Classification: With 544 classifications seeing changes, verify you're properly classified to ensure accurate premium calculations.
9. Loss Control Investment: Given the experience rating changes, investing in workplace safety can yield greater returns in premium savings.
10. Plan Renewal Strategy: Work with your insurance professional well before January 1 to understand your specific rate impact and explore coverage options.

Looking Ahead

These rate changes reflect New Jersey's ongoing efforts to balance adequate coverage for injured workers with reasonable costs for employers. Including COVID-19 pandemic losses in the data provides a more complete picture of current risk, while the trend factor adjustment accounts for improving conditions.

The Second Injury Fund increase, while adding costs, supports an important policy goal: preventing employment discrimination against workers with pre-existing conditions. Employers should view this as part of the broader social insurance structure that makes the workers' compensation system functional.

As always, the best strategy for managing workers' compensation costs combines securing competitive insurance rates with implementing robust safety programs that prevent injuries and control claims costs. The changes effective January 1, 2026, provide an opportunity to review both elements of this strategy.

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*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters).

Blog: Workers' Compensation

LinkedIn: JonGelman

LinkedIn Group: Injured Workers Law & Advocacy Group

Author: "Workers' Compensation Law" West-Thomson-Reuters

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© 2025 Jon L Gelman. All rights reserved.

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