California Insurance Commissioner Ricardo Lara has approved an 8.7% increase in advisory pure premium rates for workers’ compensation policies renewing on or after September 1, citing rising medical expenses, claim volume, and a projected increase in cumulative trauma claims.
The rate hike, while advisory, reflects broader cost pressures in the state’s workers’ comp market. Insurers are not required to adopt the new rates, but they often use them as a pricing benchmark.
The Workers’ Compensation Insurance Rating Bureau (WCIRB) had recommended an 11.2% increase. An alternate proposal from the public representative on WCIRB’s board suggested an 8.1% rise. The Department of Insurance ultimately settled on the 8.7% figure.
This marks a sharp reversal from 2024, when the department approved a 2.1% rate cut. That decision followed WCIRB’s modest 0.9% increase proposal and reflected a temporary dip in claims severity and medical costs.
This shift signals a need for serious monitoring and potential policy action. We need to base any decisions on current data and changing conditions to maintain a stable insurance environment.
Ricardo Lara, California Insurance Commissioner
Current data paints a different picture. Lara noted increases in medical-legal costs, claims adjustment expenses, and medical services per case. Cumulative trauma claims—often more complex and expensive—are also expected to rise.
Combined ratios have exceeded 110 for the last four accident years. The 2024 estimate is 123, one of the highest levels in nearly 15 years.
Lara warned that persistently rising rates could hurt business growth and employment. “We’ve worked to keep costs down for a decade while ensuring coverage for injured workers,” he said. “We must act early when the market begins to shift.”
