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.

Doubling Down on Safety in California’s Janitorial Industry

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

For those that run janitorial businesses in California, you have probably heard the news that workers’ compensation rates are on the rise. Insurance Commissioner Lara recently approved a recommended rate increase of 8.7% on average across all classification codes effective September 1st 2025.  For the janitorial industry specifically, the pure premium increase was 11%. These increases will result in higher costs for employers across the board.

In the janitorial industry, where the work is physically demanding and full of potential hazards, these rate increases hit especially hard. But the good news is, with a strong focus on workplace safety, you can help keep your claims down and your premiums more manageable.

The Most Common Claims

The janitorial industry has a unique set of risks that contribute to its workers’ compensation claims, including:

• Slips, Trips, and Falls: Wet floors, cluttered hallways, and stairs can lead to sprains, fractures, and plenty of lost days.

• Lifting and Overexertion: Heavy and improper lifting can cause painful back, shoulder, or knee injuries.

• Repetitive Motion Injuries: Tasks such as mopping, vacuuming, or scrubbing can result in repetitive strain injuries over time. Common injuries include carpal tunnel syndrome, tendonitis, and chronic back pain.

• Chemical Exposure: Regular use of cleaning agents like bleach, ammonia, and disinfectants can lead to rashes, eye irritation, or respiratory issues if workers are not properly protected.

• Cuts and Punctures: Broken glass and sharp edges can cause injuries. While often less severe, these incidents occur frequently and can result in infections.

 The Most Severe Claims

Some injuries may be less frequent but carry a much higher price tag. For example:

• Fall From Heights: Janitors who use ladders are at a higher risk of serious injuries such as fractures, head trauma, or spinal damage.

• Severe Back Injuries: Herniated discs or spinal injuries can sideline an employee for months or even end their career.

• Severe Chemical Exposure: Accidents with strong cleaning agents can cause permanent lung or eye damage.

These types of injuries not only impact your employee’s health, they also drive up insurance costs and are a big factor in the rate increases we are seeing.

Mitigating Common and Severe Claims

Maintaining a safe workplace is not just about compliance, it is also a financial strategy. Fewer claims and losses over time will help you control your premiums even in a rising rate environment.

A few key risk mitigation strategies include:

• Prevent Slips and Falls: Place “wet floor” signs immediately when mopping. Use slip resistant shoes and ensure adequate floor mats are in place.

• Teach Smart Lifting: Provide training on proper body mechanics and lifting methods.  Use carts or dollies instead of manual lifting whenever possible. Encourage team lifting for heavy or bulky objects.

• Reduce Repetitive Strain: Rotate tasks to reduce strains. Provide ergonomic tools such as lightweight mops, backpack vacuums, and adjustable handles.

• Protect Against Chemicals: Train employees on safe handling, storage, and mixing of cleaning agents. Make PPE (i.e., gloves, safety glasses, and masks) non-negotiable. And maintain clear Safety Data Sheets (SDS) for all products.

• Stay Sharp About Sharps: Provide puncture resistant gloves and safe disposal containers for broken glass or needles. Also train employees on safe handling procedures.

Develop a workplace safety program. Rancho Mesa’s SafetyOne™ platform is designed to administer an effective workplace safety program to ensure employees are getting the proper safety training, identifying hazards before an incident occurs, and investigating incidents to ensure they don’t happen in the future.

Final Takeaway

The reality is that workers’ compensation rates are firming in California. Your employees are your most valuable assets. By paying close attention to the most common risks and putting preventive measures in place, you will not only keep those employees safe but will also help minimize your frequency and severity of claims. The result will be fewer disruptions, lower expenses, and a more efficient business. 

Mid-Year Insurance Outlook for Contractors: Rising Costs, Tighter Margins

Author, Casey Craig, Account Executive, Rancho Mesa Insurance Services, Inc.

As a contractor in California, you are likely feeling the squeeze, right now. Material costs are up, labor is more expensive, and insurance, typically a predictable line item, is becoming a growing burden on your bottom line. 2025 is proving to be one of the most challenging years yet for construction business owners. Even companies with best practice risk management controls in place are getting hit with premium increases that are hard to absorb.

Auto Insurance

Auto premiums continue to climb, making fleet coverage one of the fastest growing expenses for contractors.

Replacement parts and labor costs have skyrocketed. Even a basic bumper repair now involves expensive sensors, which take longer to replace and recalibrate.

Distracted driving is at an all-time high. Today’s younger drivers have never known life without a smartphone, and it shows—claim frequency is rising, especially in high traffic areas like Southern California.

These and other factors are pushing rates higher, regardless of your claims history and shrinking margins even for the most careful contractors.

Workers’ Compensation Rate Increases Expected Soon

Even as jobsite safety improves and injury rates fall, workers’ compensation costs are trending upward—driven largely by the costs associated with litigation and cumulative trauma claims.

Each claim costs more, especially when attorneys get involved.

Once a claim becomes litigated, it can escalate into a cumulative trauma (CT) claim. This drastically increases costs while also impacting your experience modification (Ex-MOD). Even when carriers believe the injury did not occur on the job, the burden of proving it often forces them to settle anyway.

Fraudulent or exaggerated claims are becoming more common, particularly after layoffs or when employees feel disgruntled.

Contractors with tight margins and lean crews are at higher risk as a single claim can now have twice (or more) the financial impact compared to just a few years ago.

Shrinking Margins: More Pressure, Less Room for Error

Between rising insurance costs, wage inflation, and higher overhead, contractors are operating with less margin for error than ever before. Jobs that were profitable five years ago may now just get you to breaking even—or worse. Compound this with fewer jobs to bid leading to more competitors bidding on each job, all while trying to remain profitable.

This puts even more importance on risk management and proactive insurance planning. It is not just about reducing the frequency of accidents—it is about protecting your margins and keeping your business viable in a high-cost environment.

What You Can Do Right Now

Do a thorough review of your insurance policies to ensure you have the broadest coverage in place and understand clearly where the market is headed in advance of bidding projects. Revisit your stretch and mobility program, heat illness prevention protocol, and ladder safety training—especially with the rise in fraudulent claims. Avoidable injuries will only add to the pressure and compromise margins.

Ensure your fleet safety program is updated and consider using cameras or apps in vehicles that restrict phone use while driving.

Make sure foremen and all staff are treating employee’s well. Disgruntled employees are typically the ones who can and will file claims if layoffs are required.

Track and manage claims closely to prevent small issues from becoming a larger impact to your Ex-MOD and your future workers’ compensation costs. This includes building out a formal, written return-to-work program.

Partner with a broker who understands your trade and can advocate for the most competitive rates and broadest coverage for your exposures.

If you have any questions relating to this article, I am more than happy to provide a detailed audit of your insurance portfolio and safety programs. Contact me at ccraig@ranchomesa.com or call me at (619) 438-6900.