California’s Insurance Commissioner, Ricardo Lara, announced a 6.6% increase in advisory pure premium rates for workers’ comp coverage, effective September 1, 2026.

Translation: California employers will pay insurers even more to cover their employees, on top of last year’s 8.7% hike.

The increase is less than the 10.4% hike the insurer-funded Workers’ Compensation Insurance Rating Bureau (WCIRB) recommended. However, the need for any increase is questionable given the continued profitability of workers’ comp for insurers nationally and the healthy loss ratios for insurers in California specifically.

Even Managed Care Matters’ Joe Paduda, whose (admittedly well-informed) takes don’t often align with those of daisyNews, questions the need for the increase given market conditions.

Commissioner Lara claims that his actions are “guided by data.” Unfortunately, those data aren’t visible to the rest of us.

California is an infuriating exception to a national trend of declining premium rates. Under Governor Gavin Newsom, the state has stood idle as injured workers struggle to access care and doctors struggle to provide it. A broken Medical Provider Network system, painfully outmoded bureaucratic hurdles, and rampant payer non-compliance with state laws and regulations represent a failure of leadership that will continue to cost employers more and more.

WCIRB Asks Employers to Open Their Wallets

In April, Workers’ Comp Executive reported that the WCIRB pushed for a 10.4% increase to the advisory pure premium rate, which informs what insurers charge California employers for comp coverage.

daisyNews pointed out how the WCIRB failed utterly to justify this demand, and noted the many reasons WCIRB analyses should be taken with several massive mounds of coarse-ground salt:

• The WCIRB is funded by insurers, which benefit when premiums rise; insurers also dominate its Governing and Actuarial Committees.
• The underlying data for WCIRB reports are entirely insurer-derived and neither accessible to the public nor verifiable by any outside party.
• WCIRB reports ignore key sources of insurers' profit.
• WCIRB assessments of insurer profitability include the California State Compensation Insurance Fund (CA State Fund), the state’s non-profit insurer of last resort.
• WCIRB reports ignore Preferred Provider Organization (PPO) discounts that flatten real-world reimbursement rates, thereby overstating what insurers actually pay for workers’ medical care.
• Workers' Comp Executive has asserted that the WCIRB systematically underreports insurers' profits, making the market appear less healthy than it actually is.

Despite all the above, the WCIRB seems to have the loudest voice in the room when Commissioner Lara and the California Department of Insurance make their decision.

Data Don’t Support the Hike

California’s second consecutive premium hike is especially questionable given that states across the nation are lowering premium rates. Thorough studies from the National Council on Compensation Insurance show that workers’ comp is a reliably profitable line of insurance. Plus, data from the National Association of Insurance Commissioners show very healthy loss ratios for comp insurers in California, including the CA State Fund.

As Mr. Paduda put it:

“...a 2024 loss ratio of 46% and loss + cost containment ratio of 59% - while perhaps quite dated - does make any increase seem rather…unnecessary?…unless things got really expensive awfully fast.”

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Many industry voices (including Mr. Paduda and the WCIRB) point to California’s unique excess of cumulative trauma (CT) claims by way of justifying higher premiums. While California does seem to have a preponderance of CT claims, that doesn’t negate the data around comp’s profitability.

Moreover, many costs associated with CT claims reflect issues that are arguably the result of insurers’ choices, such as litigation costs and disability payments arising from disputes over delayed or denied care. According to the WCIRB itself, 25% of CT claims have zero paid medical costs after 18 months.

Meanwhile, the Workers’ Compensation Research Institute reports that California’s workers’ comp fee schedule rates are low by national standards, and that’s before taking rampant discount contracting into account.

As the WCRI’s recent CompScope report indicates, medical costs can’t justify higher premiums. So where are all these California employers’ premium dollars going, and what are they funding?

Ultimately, Commissioner Lara’s 6.6% decision fell between the 4.8% increase that the WCIRB’s nominal labor and employer members recommended and the 10.4% hike its insurer members pushed for (or as Workers’ Comp Executive so biblically put it, Lara “split the baby”).

Either way, under Governor Newsom, employers will be reaching deeper into their pockets to fund one of the least efficient, least effective workers’ comp systems in the nation.

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