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 8.2% beginning September 1, 2025 – the first increase in a decade. The Commissioner identified key cost drivers as higher medical costs, increased claims management expenses, and an increased number of cumulative trauma claims.
Commissioner Lara also sent a letter to Governor Newsom and Legislative Leaders stating that his order “reflects and early warning of growing costs in the workers’ compensation system that may need further study to inform possible actions by the State Legislature and Governor.”
The following statement may be attributed to Jerry Azevedo, spokesperson for WCAN:
The Commissioner’s order reflects trends that have been simmering for some time in California workers” comp. Medical and benefit costs are increasing, as are so-called frictional costs for litigation, medical reviews and other claim management expenses.
Costly and complicated “cumulative trauma” claims have been on the rise for years. What’s significant now is that they are growing faster than other injury types are declining. As a result, we are now seeing a truer impact of these claims on the system.
Increased workers’ comp costs are particularly challenging during times where we’re seeing substantial private sector and government layoffs. That’s because claims tend to rise during periods of job losses. An estimated 40 percent of cumulative trauma claims are filed post-employment
Even after 10 years of relative stability, California was still ranked fourth most expensive in the nation in 2025. California may soon top that list again now that rates are headed upward at a time when most states are seeing decreases.
Every decade or so, the California legislature needs to intervene to stop abuses and realign the system with its true intent. While it may not be time to hit the “panic button,” we can’t afford to hit the snooze button, either. This rate increase is a sign that we need to be on high alert for what’s going on in the system.
