July 14, 2024 Contact: Jerry Azevedo
(916) 475-2437
SACRAMENTO, Calif. – California Insurance Commissioner Ricardo Lara has issued an order increasing the workers’ compensation pure premium rate (a key benchmark for insurance rates) by 6.6% beginning September 1, 2026. The increase marks the second consecutive rate increase, after the commissioner approved an 8.7% increase last year – the first increase in a decade.
The factors driving the increase include higher medical costs, increased claims management expenses, and an increased number of cumulative trauma claims (CT). Cumulative trauma refers to injury claims that are not the result of sudden, specific events, but claim injury from repetitive physical activity or stress. CT claims have doubled as a share of claims in the past 15 years, now accounting for one quarter of claims. CT claims are generally more expensive, complex and take longer to resolve, and more than 40% are filed after a worker has already stopped working for their employer. CT claims also frequently cite health conditions that are chronic or common health conditions that are not predominantly caused by work, but included due to the system’s 1% causation threshold.
The following statement may be attributed to Jerry Azevedo, spokesperson for WCAN:
The Commissioner’s order reflects the fact that cost trends are intensifying, particularly the increased stress on the system from cumulative trauma claims, which are growing faster than any other type of claim.
What’s also notable is that a large share of CT claims are filed post-employment, even years after employment, since there is no statute of limitations. In an era where we are seeing substantial private and public sector layoffs, there’s real potential that an even greater flood of CT claims could capsize the system.After more than a decade of relative stability, it’s time the legislature look at actions to prevent a potential cost crisis and ensure the system is meeting its true mission of providing health care and compensation for work-caused injuries and disabilities.
