The Arizona Department of Insurance and Financial Institutions (DIFI) has good news for the state’s employers: a 6.7% decrease in workers’ comp premium rates.

Arizona joins most of the US in easing the cost of comp coverage for employers, with the DIFI announcing the 12th (yes, 12th) consecutive year of rate reduction. The DIFI takes its rate-setting cues from the National Council on Compensation Insurance (NCCI), which advises most US states.

Yet, one state over, California’s Workers’ Compensation Insurance Rating Bureau (WCIRB) imposed an 8.7% rate increase on employers, defying the national trend of falling rates.

With insurers’ comp profits on the rise, most states struggle to justify squeezing employers for higher premiums. Not so in California, where the WCIRB insists insurers need more money based on “research” that shows cracks under scrutiny.

AZ: Lower Comp Rates for 2026

The Arizona DIFI announced the 6.7% decrease, effective January 1 of this year, through a press release. DIFI Interim Director Maria Ailor stated (emphasis ours):

“The decrease in rates reflects a continued decrease in workers’ compensation claims, which results in reduced work comp premiums and direct savings for businesses…”

Subject to DIFI review and approval, the NCCI’s proposed rates serve as the baseline for insurers' final premium rates for Arizona employers. The NCCI has reduced the proposed rates for Arizona every year for over a decade.

In the formal summary of its proposed rate filing, the NCCI noted a decrease in claim frequency and manageable increases in the costs of benefits, and cited the broad national trend of decreasing comp costs (emphases ours):

“The combination of frequency declines and moderate benefit costs have contributed to reductions in overall workers compensation system costs.”

In other words, insurers are doing splendidly, creating a clear opportunity to ease the burden on employers…unless they’re in California, apparently.

CA: (Somehow) Charging Employers More for Comp Coverage

Last year, California Insurance Commissioner Ricardo Lara formally acquiesced to the WCIRB’s proposal to hike rates by 8.7%.

This, despite the fact that (as the NCCI and others consistently report) profits on the workers’ comp line of insurance are through the roof. Moreover, loss cost data from the National Association of Insurance Commissioners suggest that California insurers ought to be in the black.

So why the hike? Even in other states that rely on separate rating bureaus instead of the NCCI to establish premiums (e.g., New York, New Jersey, and Delaware), rates are dropping.

The short answer is: no one can say with any degree of certainty, thanks to the general opacity of WCIRB research and data analysis. Looking for a rational explanation for rate hikes in WCIRB reports is an exercise in futility, as the WCIRB:

• Does not provide the underlying, exclusively insurer-derived data that informs its reports.
• Considers non-medical expenses, such as Medical-Legal disputes, to be “medical” costs.
• Leaves Preferred Provider Organization (PPO) discounts, which drastically reduce insurer spending on actual treatment, out of its calculations.
• Is dominated by insurers, nominal labor representatives notwithstanding.

With comp profits soaring nationally, loss ratios healthy for California insurers, and California providers subject to both low fee schedule rates and rampant discounting, it’s hard to fathom why insurers need employers to dig deeper into their pockets. Yet, here we are.

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