Blog - Tag: workers’ compensation
Insurance Commissioner Approves Workers’ Comp Rate Hike
California Insurance Commissioner Ricardo Lara has ordered an average 6.6% increase in the advisory workers’ compensation benchmark rate for policies incepting on or after Sept. 1, 2026, marking the second consecutive increase after more than a decade of declining rates.
The rate follows two years of increasing claim and claims adjustment costs, a substantial uptick in cumulative trauma claims and rising medical and administrative costs. The Workers’ Compensation Insurance Rating Bureau (WCRIB) had recommended a 10.4% increase in the average “pure premium” rate.
The pure premium rate is a benchmark insurers use to price policies. It accounts only for the cost of claims and adjusting them, not expenses such as office operations, personnel costs unrelated to claims, marketing or other overhead. Insurers are free to price their policies as they see fit and workers’ compensation rates are still at their lowest level in decades.
The rate increase will bring the average pure premium to $1.65 per $100 of payroll across all class codes. However, insurers are still charging less than that in their full rates, meaning they may not be taking in enough to cover claims costs.
In 2025, collected premiums resulted in an average charged rate of $1.56, down slightly from $1.58 in 2024 and continuing the overall downward trend in market rates that has persisted since the first half of 2015.
Last year, the insurance commissioner approved an 8.7% rate hike, below the 11.2% sought by the Rating Bureau.
The Rating Bureau cited the following to support its rate increase recommendation:
Cumulative trauma claims
WCIRB estimates that 26.4% of all workers’ comp claims filed in the state in 2025 involved cumulative trauma injuries, compared with 15% in 2021. CT claims are not for sudden injuries but rather those that develop over time through repetitive motion, such as:
- Carpal tunnel syndrome — Often claimed by office workers, data entry personnel and assembly line workers due to repetitive hand and wrist movements.
- Chronic back and neck injuries — Caused by years of lifting, bending, twisting or maintaining poor posture.
- Tendonitis and tendon disorders — Inflammation from repetitive shoulder or arm movements, common in construction, warehouse and food service jobs.
- Shoulder injuries — Rotator cuff tears or bursitis from repetitive overhead lifting.
- Knee problems — Develops from repetitive kneeling, squatting or climbing stairs, frequently seen in plumbers or floor layers.
About three in five CT claims are filed after an employee is terminated, according to WCIRB. A cottage industry of lawyers seeks out recently laid-off workers and persuades them to file these claims. Adding to the cost, nearly all CT claims are litigated, in most cases from the first notice.
Medical costs
One anomaly in CT claims is that they usually incur few medical costs in the first year, which masks the growing issue of rising medical costs for workers’ comp claims. According to WCIRB, average medical costs per claim increased 1.7% between 2021 and 2023, but the increase was 3% when CT claims were excluded.
Associated medical-legal costs per claim rose 14% in 2025, while costs for medical equipment and other medical services increased 7% in the same period.
Claims adjusting costs
The high litigation rates for CT claims are seeping into the cost of adjusting claims, according to WCIRB. It projects that insurers’ loss adjustment expense ratio (the cost of adjusting claims) will increase to 37.7% of claims costs from 35.7% in the Sept. 1, 2025, filing.
Claims adjusting costs are expected to rise 5.5% annually between 2026 and 2028.
The takeaway
While the pure premium rate is rising, employers may see increases or reductions of varying degrees based on several factors, including:
- The employer’s individual claims history,
- The employer’s industry,
- The mix of employees and operations, and
- The employer’s location.
If you have questions about your workers’ comp coverage, please give us a call.
Light Duty Can Reduce Workers’ Comp Claims Costs
After an employee is injured on the job, recuperation times can vary, but every day they are away from work, the claim cost increases and your productivity suffers.
By implementing a program that offers a good incentive to return, you can reduce the risk of paying more benefits than necessary.
Recent research shows that employers lose about 80 million workdays annually due to workplace injuries or illnesses. The number of employees who remain away from work for more than seven days because of injuries or illnesses stretches into the millions.
This means that employers are left to deal with the high cost of workers’ compensation premiums, lost productivity and disability benefits. But, by creating a special incentive program, you can greatly reduce these costs.
Light duties
When an injured worker is off work and healing, a physician will regularly examine them. These exams will in part determine whether the worker is ready to return to their previous tasks.
In some cases, it may be possible to get the individual back to work sooner with light duties.
For example, consider a worker who is injured while lifting boxes in a warehouse. The attending physician will be examining the employee to determine whether he or she is ready to lift boxes again.
If the employee has a back injury, it could be several weeks before they can return to work.
But, if the employer offered the worker an easy temporary job in the office, they may be able to return much sooner. To make something like this happen, a light-duty program must be put in place. A solid program should have the following features:
- Addresses environmental, physical, knowledge and emotional factors that may prevent employees from returning to work.
- Makes the transition to full-time work easier.
- Focuses on employees’ abilities instead of their disabilities.
Light-duty programs improve employee morale by increasing incentives for returning to work and staying safe. For the employer, they maintain productivity by lowering the number of lost work days.
These programs help speed up employees’ recovery processes. Recent research shows that 50% of workers who stay out of work for more than six months will never return to their jobs. If they stay out for more than one year, the likelihood of returning to work is about 10%.
Getting employees back to work as quickly as possible is the best way to bring about feelings of being part of the team. It also lessens the financial impact on the employee and their family.
The elements of a solid plan
To make sure a program is as comprehensive as possible, include the following elements:
- Performing meaningful tasks instead of simple busy work.
- Coordination with the doctor about work restrictions.
- Alternative work assignments that benefit the employer and employee.
- Descriptions of duties the injured employee must perform.
- Provisions for situations where employees may have to take additional medical leave time after returning to work.
- Stated conditions and time parameters for temporary assignments.
Benefits of return-to-work programs
- Making it easier to keep valuable employees, who are productive while recovering.
- Making communication happen between employees, employers and doctors, instead of between employees and their doctors.
- Making it difficult for employees to stay out of work longer than necessary.
- Reducing the need to recruit, hire and train new workers.
- Reducing the cost of workers’ comp disability payments to injured workers.
- Showing your concern for the injured employee’s health.
- Reducing claims costs, which can help reduce your rates.
The takeaway
Workers’ compensation consumes a sizable portion of overall personnel costs. A solid return program can reduce those costs, including intangible ones, like the absence of an experienced worker. Also, it is good for employee morale.