CA Workers’ Compensation Market Faces Increased Pressure Beneath Stable Surface

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

Recently, the Workers’ Compensation Insurance Rating Bureau (WCIRB) of California released its Quarterly Experience Report that offers insight into the state of the California workers’ compensation market. While at a glance, the market may seem stable, there are evolving claim patterns that are creating challenges for insurers and employers alike.

Premiums Hold Steady as Rates Bottom Out

Since the pandemic, written premium in California has remained steady while average rates have reached historically low levels. However, recent data suggests this decline may be slowing. Modest rate changes over the past two years and the upcoming proposed increases signal that pricing may have reached a breaking point and insurers will be responding with higher rates.

Profitability Under Strain

Combined ratios, which are a key measure of underwriting performance, rose again in 2025, hitting its highest level in over 20 years at 129%. For the fifth consecutive year, combined ratios have exceeded 110%, indicating that insurers are paying out significantly more in claims and expenses than they are collecting in premium.

Cumulative Trauma Claims Reshape the Landscape

A major driver behind many of these trends is the rise in cumulative trauma (CT) claims. Since 2021, CT indemnity claim frequency has increased from 15.7% to 23.7%, clearly making these claims a significant threat to the health of the industry. CT claims typically involve repeated stress or wear and tear injuries rather than single incidents. They are often more complex, slower to resolve, and more likely to involve litigation. As a result, they contribute to longer claim durations and increased administrative and legal costs.

Looking Ahead

The WCIRB report highlights a workers’ compensation system at a critical juncture. On the surface, stable premiums and low rates may suggest a healthy market. But beneath that stability, rising claim frequency, increasing litigation, and escalating medical and legal costs are putting sustained pressure on the system.

As we look to the future, we should expect insurance companies to focus on rate adequacy, cost containment, and claims management strategies. We should also expect legislative changes relating to the increased frequency and costs associated with CT claims. Rancho Mesa has taken a leadership position in pushing for legislative reform from our state representatives to help prevent the growing abuse of the system. 

Without pricing and legislative changes, the California workers’ compensation market is a ticking time bomb. If you would like to know how you can get involved to push CT claim reform, please feel free to reach out to me at (619) 937-0174 or jhoolihan@ranchomesa.com.

California’s Workers’ Comp Rates Poised to Increase Again: What the 10.4% Proposal Means for Landscape Employers

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) recently released a proposed pure premium rate increase of 10.4% across all class codes. As a reminder, the proposed increase does not mean every class code will see a 10.4% increase on their specific class code, rather that is the blended average increase across all class codes. These proposed rate increases will be reviewed by California’s Insurance Commissioner Ricardo Lara sometime in mid-July for the new rates to go into effect September 1, 2026.

Last year, the WCIRB proposed an 11.2% pure premium increase, but Lara ultimately adopted a lower increase of 8.7% in July. We will learn more about the Commissioner’s decision on this year’s proposal in the coming months.

Looking specifically at the 0042 class code, the proposed pure premium rates are recommended to increase from $5.30 to $5.77, which is a 9% increase. For context, last year, the 0042 class code had an 8% increase on the pure premium rates. If this increase is approved again this year, it will mark the fifth consecutive year that the 0042 class code has seen an increase on the pure premium rates. These trends point toward a continuing hardening workers’ compensation market, which could result in higher annual workers’ compensation premiums for employers.

So, why has the 0042 class code pure premium rates continue to increase? Many factors go into this increase, including surging medical costs, high litigation rates, and a rise in costly cumulative trauma claims to name a few.

To help combat these potential increases, I encourage all landscape companies to really hone in on their current safety program. Invest in technologies, safety certification, trainings, stretch and flex programs, anything that can create a safer environment for your employees and thus lowering the chances of worker’s compensation claims. Additionally, implementing quarterly claim reviews with your broker, claims advocate advisor, and workers’ compensation carrier adjuster is a critical step in managing claim outcomes that helps to control your Experience Modification Rate.

Ultimately, staying proactive through strong safety practices and disciplined claims management will be the most effective way for landscape companies to help mitigate the potential increases to the 0042 pure premium rates.

Reach out to me should you have further questions on the pure premium rate increases and/or an interest in refreshing your approach to safety. I can be reached at ggarcia@ranchomesa.com.