Commissioner Lara takes action to maintain stable workers’ compensation market amid rising costs
News: 2026 Press Release
SACRAMENTO, Calif. —Taking action to preserve business' access to insurance, Insurance Commissioner Ricardo Lara today adopted a new workers’ compensation insurance average advisory pure premium rate of $1.65 per $100 of payroll, a 6.6% increase from the 2025 approved rate. This is in line with the analysis and recommendation of Department of Insurance actuaries but below the 10.4% requested rate increase of the Workers' Compensation Insurance Rating Bureau of California (WCIRB). An actuary representing public members of the WCIRB board also recommended an increase in rates.
The adopted rate is advisory, meaning that insurance companies are not bound by it and are free to set their own rates. The new rate will be effective on September 1, 2026.
“Last year, we alerted policymakers to early warning signs of increasing costs in California’s workers’ compensation system, and those trends require continued attention,” said Commissioner Lara. “Our actions must be guided by data and focused on maintaining a workers’ compensation system that protects injured workers, supports California businesses, and promotes a stable and competitive insurance marketplace. This adopted rate reflects our thorough review of increasing cost pressures, and we will continue working with stakeholders on solutions that keep California’s workers’ compensation system strong.”
Commissioner Lara issued a letter to state leaders in 2025 alerting them to growing costs in the California workers’ compensation system, which can impact California’s businesses. In the letter, Commissioner Lara noted that because "higher insurance rates can affect business' ability to hire and sustain financial growth, it is important to be aware of early warning signs and respond appropriately."
Higher medical treatment and medical-legal costs, a greater number of projected cumulative trauma claims, and escalating costs associated with adjusting claims have all resulted in deteriorating accident year combined ratios. At the same time, the rates charged by insurers have remained low. Wage increases from a growing economy have partially offset some of the higher costs.
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Media notes:
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.
