California Workers’ Comp Combined Ratio Highest in More Than 20 Years

The projected combined ratio for California workers’ compensation insurers reached 127% in 2025, the highest in more than 20 years, a new report shows.

The Workers’ Compensation Insurance Rating Bureau of California released its latest Quarterly Experience Report, which delves into insurer experience through June 30.

The report shows combined ratios exceeded 110% for five consecutive years, reflecting a trend of higher claim frequency and increasing loss and loss adjustment expense costs.

Written premium in the first six months of 2026 was 5% higher than during the same period in 2025. The estimated average charged rate for the first half of 2026 was $1.64 per $100 of payroll, slightly higher than the $1.63 recorded in 2025.

California Insurance Commissioner Ricardo Lara in July approved an average 8.7% increase in advisory pure premium rates effective Sept. 1, 2025, and a 6.6% increase effective Sept. 1, 2026.

The projected loss and allocated loss adjustment expense ratio for accident year 2025 was 95%, similar to the 94% recorded in 2024. Recent increases have been associated with higher average medical and allocated loss adjustment expense costs, along with increasing indemnity claim frequency, particularly for cumulative trauma claims.

Indemnity claim frequency continued to rise in the first half of the year to 3.6%. Cumulative trauma claims continued to be a driver of frequency increases since 2022. These claims grew from roughly 18% of indemnity claims in 2022 to more than 25%, according to the WCIRB.

Projected total loss and allocated loss adjustment expense severity for 2025 was $81,460 per indemnity claim. That was unchanged from 2024 but up more than 30% from 2016. The report notes that recent severity figures may be understated because cumulative trauma claims often develop more slowly, with roughly 25% showing no medical payments at 18 months.

Allocated loss adjustment expense severity, excluding medical cost containment program costs, rose 11% in 2025 to $13,860 per indemnity claim. The category has also increased each year since 2021.

Medical-legal costs per claim have risen sharply since 2022, reflecting increased use of medical-legal services and higher average payments per service. Increases have been more pronounced in Southern California.

Topics California Workers' Compensation

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