- California workers’ compensation insurers recorded a projected combined ratio of 127% for 2025, the highest in more than two decades, with ratios exceeding 110% for five consecutive years.
- Written premiums increased 5% in the first half of 2026, while indemnity claim frequency reached 3.6%, driven partly by rising cumulative trauma claims.
- Average loss and allocated loss adjustment expense severity reached $81,460 per indemnity claim, more than 30% above 2016 levels, while medical-legal and claim handling costs continued to increase.
California workers’ compensation insurers recorded a projected combined ratio of 127% for 2025, the highest level in more than 20 years, as rising claim frequency and increasing medical and loss adjustment expenses continued to pressure underwriting profitability.
The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) reported the deterioration in its latest Quarterly Experience Report, covering insurer results through June 30, 2026.
Combined ratios have exceeded 110% for five consecutive years, reflecting persistent increases in claims costs and indemnity claim frequency across the state’s workers’ compensation insurance market.
Written premiums rose 5% during the first half of 2026 compared with the corresponding period in 2025. The estimated average charged rate increased slightly to $1.64 per $100 of payroll, compared with $1.63 in 2025.
California Insurance Commissioner Ricardo Lara approved average increases in advisory pure premium rates of 8.7%, effective September 1, 2025, and 6.6%, effective September 1, 2026.
The projected loss and allocated loss adjustment expense ratio for accident year 2025 reached 95%, compared with 94% in 2024. Recent increases have been associated with higher average medical expenses, rising allocated loss adjustment costs and greater indemnity claim frequency, particularly involving cumulative trauma injuries.
Indemnity claim frequency continued increasing during the first half of 2026, reaching 3.6%. Cumulative trauma claims have been a major contributor to the frequency trend since 2022, when they represented approximately 18% of indemnity claims. Their share has since exceeded 25%, according to the WCIRB.
Projected total loss and allocated loss adjustment expense severity for 2025 stood at $81,460 per indemnity claim, unchanged from 2024 but more than 30% higher than in 2016.
The WCIRB cautioned that recent severity estimates may understate ultimate claim costs because cumulative trauma cases typically develop more slowly. Approximately 25% of these claims have no recorded medical payments 18 months after the injury.
Allocated loss adjustment expense severity, excluding medical cost containment program expenses, increased 11% in 2025 to $13,860 per indemnity claim. This measure has risen annually since 2021.
Medical-legal expenses per claim have also increased substantially since 2022, driven by greater utilization of medical-legal services and higher average payments for individual services. The WCIRB found that these cost increases have been particularly pronounced in Southern California.
