American International Group, Inc. (AIG) is having what’s shaping up to be a banner year, with second-quarter results indicating an “exceptional” 2026 so far for the insurance giant.

An AIG press release specifically credits “favorable development” in workers’ comp with some amount of its second-quarter success.

AIG’s exceptional 2026 raises a question that daisyNews will keep asking until someone offers a satisfactory answer: If the workers’ comp business is so good (and it is), why are insurers like AIG collecting higher and higher workers’ comp premiums from California employers?

AIG is a member of California’s Workers’ Compensation Insurance Rating Bureau (WCIRB), which successfully advocated for premium increases this year (effective today) and last year.

Even as employers’ workers’ comp premiums plummet in almost every other state and mutual and state insurers (including the California State Compensation Fund) deliver dividends to policyholders, the WCIRB and the state government continue to demand more money from California employers. AIG is a clear beneficiary of this frustrating dynamic.

AIG: Swimming in Profits

AIG’s triumphant report quoted company President and CEO Eric Andersen’s statement that the insurer “delivered another strong quarter, marking an exceptional first half of the year,” and credited AIG’s ability to home in on particularly profitable lines of insurance (emphasis ours):  

“Our strong quarterly results demonstrate our ability to perform well in the current market, which has transitioned from an extended phase of broad positive pricing into a more selective environment, where profitability and growth are increasingly dependent on line-specific dynamics.”

As insurance industry observers know, the workers’ comp line has been among the most reliably profitable in recent years, often drastically outperforming other lines of insurance. Digging into the specifics of the second quarter of 2026, AIG gives a notable shout-out to comp as a primary driver of the good news (emphasis ours):

“Second quarter 2026 included favorable prior year development (PYD), net of reinsurance and prior year premiums, of $145 million, compared to $112 million in the prior year quarter, primarily due to favorable development in U.S. Workers’ Compensation and U.S. Property and Special Risks…”

Translation: workers’ comp is crushing it, and AIG is reaping the benefits.

What the press release doesn’t mention: California employers are coughing up increasing premiums to fund AIG’s success.

What Are CA Premium Dollars Funding?

While almost every state in the country has responded to comp’s increasing profitability by easing the burden on employers, California insists on jacking up the cost of coverage. Why remains an open question, or at least one that insurers have failed to adequately address.

Consider the facts in conjunction:

• Nationally, comp is raking in the dough.
• Data on loss ratios indicate profitability for insurers in California specifically.
• California fee schedules for injured worker treatment are among the stingiest in the country.

To justify premium rate hikes, the WCIRB and insurer advocates offer muddled, unverifiable data directly from the insurers that benefit from the increases, along with carefully implied theories about Cumulative Trauma cases (which even the WCIRB notes have relatively low medical spend).

Insurers’ convenient conjectures completely ignore one extremely salient factor: the absurd administrative costs (for which healthcare providers are not remotely responsible) of delivering care and benefits to injured workers in California, which stand at $0.52 per dollar, almost twice the national median of $0.27 per dollar.

The simple, undeniable reality is that California employers are paying some of the highest premiums to fund one of the least efficient comp systems in the nation. AIG and other insurers are getting their slice of the action, as their jubilant press release indicates.

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