Rising Workers' Compensation Rates

From the Desk Of:

Scott M. Tilley, Esq.

President, Managing Attorney

Certified Specialist Workers' Compensation Law

The State Bar of California Board of Legal Specialization

Comp Rates Are Going Up 6.6% on September 1. Here's What's Actually Driving It.

Insurance Commissioner Ricardo Lara approved a new workers' compensation advisory pure premium rate of $1.65 per $100 of payroll on July 10, 2026, a 6.6% increase over 2025, effective for new and renewal policies starting September 1. That's real money hitting renewals this fall, and the reasoning behind it tells you exactly where your claims dollars are going.

The number is lower than insurers wanted, but it's still an increase

The Workers' Compensation Insurance Rating Bureau had asked for 10.4%. The Commissioner's actuaries came in lower, at 6.6%, and that's the figure that took effect. Remember, this rate is advisory. Individual carriers aren't bound by it and can file their own rates. But it's the benchmark the whole market prices against, and a 6.6% increase after years of relatively flat or declining rates is a signal, not noise.

What the Commissioner said is driving it

In the decision, the Department pointed to rising medical treatment costs, higher medical-legal expenses, projected growth in cumulative trauma claims, and increased claims adjustment costs. Those factors have pushed accident year combined ratios higher. Wage growth from the broader economy offset some of the pressure, but not enough to keep rates flat. Commissioner Lara framed the decision as a balance: "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." Notice what's on that list. Cumulative trauma claims made the Commissioner's own list of cost drivers behind this rate hike, which lines up with what CWCI's claims data has been showing all year: CT claim frequency is rising fast, and it's showing up in the price of coverage.

What to do about it now

If you're an employer, don't wait for your September renewal notice to be surprised. Ask your broker now how this advisory rate is likely to translate into your actual quote, and get ahead of any payroll audit issues before they collide with a renewal conversation. If you're a carrier or TPA, this is a good time to revisit claims-handling practices regarding the exact cost categories the Commissioner flagged. Medical-legal spend and cumulative trauma claims are two areas where early, aggressive claims management has an outsized effect on your loss ratio. A rate increase driven by specific, named cost categories is also a roadmap for where defense investment pays for itself. Don't treat this as background market news. Treat it as a checklist.

Law Offices of Parker & Irwin

This post is for general information only and is not legal advice.