The costs of underwriting California workers’ compensation claims are increasing due to cumulative trauma claims and other factors, according to recent reporting from the Workers’ Compensation Insurance Ratings Bureau and the Commission on Health and Safety and Workers’ Compensation.
During the Ratings Bureau’s annual conference in mid-July, WCIRB Chief Actuary Tony Milano said that cumulative trauma claims are leading to the first pure premium rate increase in more than 10 years, per reporting from WorkCompCentral. The pure premium rate – which is an advisory rate meant to guide insurers in the state of California – went up 8.7% on 9/1/25, and was followed by a 6.6% rate increase for policies starting on/after 9/1/25.
Milano noted that rates are still significantly lower than they were in 2014 and 2015.
Nevertheless, these recent rate increases are bucking a trend seen the last few years, where rates have generally been stable.
Combined loss ratios also hit 127% in 2025, following a ratio of 124% in 2024, Milano said. These loss ratios are important metrics to watch as a market indicator. Why? When the ratio is above 100%, carriers are losing money. When it is under 100%, carriers are making money. Carriers have been operating at a loss since 2020, as the combined loss ratios have been higher than 100% since then. Loss ratios of 120%-plus means that carriers are losing a lot of money.
“That was a somewhat different era where rates were growing, but the costs, particularly medical, were increasing at a much higher pace,” Milano said. “In this environment, the rates are still very low. Costs are increasing, but they’re not anywhere near the levels they were 15 years ago, and the cost drivers are different.”
MEDICAL COSTS
So to recap, in mid-July, Milano is saying that medical costs are increasing, but growing at a lower rate than they were in previous bad years. Don’t let that fool you though – medical costs are still going up, they just aren’t growing as rapidly as they were in some of the worst years in recent history.
How do we know that? A few weeks after the WCIRB conference, the Commission on Health and Safety and Workers’ Compensation (CHSWC) reported that medical costs increased 8.61% to $7.933 billion in 2024, compared to $7.304 billion in 2023. (Hat tip to our friends at WorkCompCentral, as well as the CHSWC.)
The combination of medical, indemnity, and expense costs jumped from $21.594 billion in 2023 to $24.516 billion in 2024. The biggest driver of that was “expenses,” which increased from $7.735 billion to $9.734 billion.
A closer look at p. 74 of the CHSWC annual report had a very interesting stat: “The average number of medical-legal evaluations per 100 all claims increased by 21 percent from SY 2021 to ST 2024 …”
WHAT’S CAUSING THE TREND
There is one common underlying theme throughout both reports – cumulative trauma claims.
For starters, Milano said that cumulative trauma claims are driving increases in claims frequency. For instance, CT claims were about 25% of all indemnity claims in 2024, and the WCIRB estimates those will jump to 30% of all indemnity claims in 2025. The WorkCompCentral article slices and dices multiple stats to show how CT claims are driving up claims frequency in different ways, and therefore costs, for carriers – especially since 2022.
So what happened around 2021 and 2022? The proliferation of applicant attorney firms filing cumulative trauma claims that allege numerous body parts – creating that 21% jump in med-legal evaluations CHSWC touched on – as well as driving up claims frequency.
Now let’s examine another recent headline, where WorkCompCentral reported on an en banc decision that rescinded a Van Nuys judge’s decision to set aside 24 compromise and release agreements for further review. Of the 24 cases, 21 of those included CT claims. Of those, 13 claimed hostile work environment injuries. The judge famously lamented that applicants who live all over California are flocking to Southern California applicants’ attorneys in a “get rich quick” scheme that she objected to. While the WCAB clearly did not approve of comments like that and stated that they warranted disqualification, the applicant’s attorney firm at the heart of those decisions does have a penchant for pleading cases with questionable merit.
For several years there, it seemed that almost every application for adjudication from a particular applicant’s attorney firm had the magic words, “hostile work environment.” That firm seems to have decreased the practice of pleading “hostile work environment” on the vast majority of its claims, but it still remains quite prevalent.
The undersigned also notes that is not the only judge who has criticized the filing practices of certain applicant’s attorneys. There are many other judges who have raised similar concerns.
CONCLUSION
Cumulative trauma claims and medical expenses are making costs rise at the highest levels in years. A recent trend of sketchy cumulative trauma claims pleading hostile work environment and as many specialties as possible is leading to more med-legal evaluations per case.
Common sense tells us that more than half of all employers are not “hostile work environments,” and that every case does not require three-to-four QME panels in different specialties.
If we continue down this path, we will unfortunately revisit the days of red ink, with carriers going the way of the dinosaur or fleeing the state at record rates. Historically speaking, the property casualty sector is usually the one with the most red ink on carriers’ spreadsheets, and that is bound to catch the eye of the executive suite who makes the bigger decisions.
That may sound fine and dandy for the plaintiffs’ bar for now, until costs and rates go so high that insurers and businesses revolt. For those old enough to remember, that’s what led to Senate Bill 899, one of the most conservative workers’ compensation reforms in decades. It looks like that fact pattern could be happening again.
Got a question about workers’ compensation defense issues or pending legislation? Feel free to contact John P. Kamin. Mr. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location, where he monitors the recent legislative affairs as the firm’s Director of the Editorial Board. Mr. Kamin previously worked as a journalist for WorkCompCentral, where he reported on work-related injuries in all 50 states. Please feel free to contact John at jkamin@bradfordbarthel.com or at (818) 654-0411.
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