California Insurance Commissioner Ricardo Lara has approved a new advisory premium rate for the state’s workers’ compensation insurance market, aiming to balance growing claims costs with the need to preserve affordable coverage for employers. The advisory benchmark has been set at $1.65 per $100 of payroll, representing a 6.6% increase from the rate approved for 2025. The revised advisory rate will take effect on September 1, 2026.
The approved adjustment is lower than the 10.4% increase recommended by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB). State actuaries determined that a more moderate rise was appropriate after reviewing current market conditions, although an actuary representing public members of the WCIRB board also supported an increase. Because the figure is advisory, insurers remain free to determine their own pricing.
Explaining the decision, Commissioner Lara emphasized the importance of relying on actuarial analysis while protecting both businesses and injured employees from long-term market instability.
“Last year, we alerted policymakers to early warning signs of increasing costs in California’s workers’ compensation system, and those trends require continued attention,” said Commissioner Lara. “Our actions must be guided by data and focused on maintaining a workers’ compensation system that protects injured workers, supports California businesses, and promotes a stable and competitive insurance marketplace. This adopted rate reflects our thorough review of increasing cost pressures, and we will continue working with stakeholders on solutions that keep California’s workers’ compensation system strong.”
The commissioner had previously warned state leaders about rising financial pressures within the workers’ compensation system, noting that higher insurance premiums could affect employers’ ability to hire and expand. Those concerns have continued as medical treatment expenses, medical-legal costs, projected cumulative trauma claims, and claim adjustment costs have all increased, leading to weaker accident-year combined ratios. Even so, relatively low insurer pricing and wage growth across California’s economy have helped offset part of the upward cost pressure.
Source: California Department of Insurance.
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