Ep. 501 Grab Your Popcorn: Tracking California's Possible 11% Workers’ Comp Shift
This year, business owners and insurance companies eagerly await important upcoming decisions from the the Workers’ Compensation Insurance Rating Bureau. In this episode, Rancho Mesa's Alyssa Burley and Account Executive Kevin Howard discuss the possible pure premium rate increases and some key dates employers should know.
Show Notes: the Workers’ Compensation Insurance Rating Bureau, Subscribe to Rancho Mesa's Newsletter
Director/Host: Alyssa Burley
Guest: Kevin Howard
Producer/Editor: Megan Lockhart
Music: "Home" by JHS Pedals, “News Room News” by Spence
© Copyright 2025. Rancho Mesa Insurance Services, Inc. All rights reserved.
Transcript
Alyssa Burley: You’re listening to Rancho Mesa’s StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive.
I’m your host, Alyssa Burley, and I’m joined by Kevin Howard, Partner with Rancho Mesa. He specializes in providing insurance and risk management solutions to artisan contractors.
Kevin, welcome to the show.
Kevin Howard: Thanks for having me, I'm so excited and I got some things to say.
AB: All right.
KH: Let's go.
AB: So today we're going to discuss California's workers' compensation rate increases and some key dates employers should know. And over the last two, almost three weeks, the California insurance industry has been weighing in on the recent pure premium rate recommendations. So Kevin, will you explain to our listeners what has recently happened in California's workers' compensation system?
KH: I would love to, and to start, we got to stare at what's going on overall. We have inflation going on out there, tariff wars, auto premiums going up, general liability premiums are slowly creeping up, and the workers' compensation has been kind of the saving grace in the last couple of years. It hasn't really hardened. But in this podcast, we're going to talk about the timeline that is pretty consistent every year and why it's important for us to stare at this year in particular.
The Bureau just recommended an 11.2% increase. And that's purely a data analysis of how much premium has been brought in versus claims paid out, just matter of factually. And so when they make that recommendation, their actuaries are saying, "Hey, in order for you out there, insurance carriers to be profitable, we're recommending an 11.2% increase."
And so the next couple of months, I brought something for you to open that kind of set the tone.
AB: All right. I'm a little nervous.
KH: A little gift. A little gift.
AB: Okay. So Kevin has brought in a shiny pink bag. All right. So I am going to open this.
KH: I have daughters. It's a shiny pink bag.
AB: Okay, let's see. Okay, so Kevin has brought in, it looks like it's a candle, but it looks like a bucket of popcorn. All right, so you have to explain what the heck this means.
KH: Okay, insurance people, consumers, insureds, the next couple of months, grab your popcorn We don't know what's going to happen. We don't know if carriers are going to follow suit, take the 11% increase. We don't know if it's going to be consistent with the last couple of years where there's this increased recommendation, but our Commissioner of Insurance doesn't agree.
And so, you know, we'll talk about the next couple of months, but it really is a chance for us to pay more attention as insurance agents. And for listeners out there that purchase insurance, it's important too, like are we gearing up for what is coming and are we on the same page as far as like when will this go into effect?
AB: Okay so you're thinking everybody needs to pay attention to what's happening get your popcorn and watch to see what's going to happen in the future.
KH: Yeah did you smell the candle? Can you smell it?
AB: I did not. Oh it smells like butter. All right, so will you kind of explain what happens in the next couple of months, those key dates? Because there's calendar of events that happens every year. Will you explain how that kind of works?
KH: Yeah, so forever, January 1st was when the base rates were officially released from the carriers. And so as an insurance agent, we had the holiday season and a majority of our clients renew on January 1st, and so waiting for the base rates to be officially published, it created such a log-jam. So thank goodness in 2023, we got away from that. And so September 1st is officially when the base rates are locked in from each carrier. So you're an independent carrier, you know, the CompWest, State Fund, Zenith, Travelers, Berkshire Hathaway, I don't want to leave anybody out, they're doing their math while we're eating our popcorn. You know, they're doing their math on how can they: a.) Make sure that their rates are competitive for consumers and so that we can go out there and have free enterprise on how they can earn more business, but also how can they stay profitable? And they stare at what's called combined ratios, which is basically the premium in, the claims out plus their overhead, their bills, their electric bill, phone bills, payroll.
And so that math now is all locked in September 1st, but they're doing the math now. In April, which happened right now, is when the Bureau makes the recommendation. So they officially come out and say, "Hey, we recommend in this year, 2025, an 11.2% increase."
AB: That would happen in September, right?
KH: That the commissioner of insurance will make his or her recommendation.
AB: Okay.
KH: And then between those two numbers, the quest for the insurance carriers is to say, "What do we think? Thanks for the recommendation, Insurance Bureau. Thank you, commissioner Lara, for putting your two cents on it. Here's what we're going to do."
And this year, because there's such a large recommendation, we don't know how this is going to shake out. Other parts of that timeline in June and July up in San Francisco, lobbyists, unions, there'll be a chance for people to openly speak on these topics. And I did a little research, kind of fun. Arnold Schwarzenegger, when he was, you know, the governator’s coming in and he's fighting for reform, that was a big meeting, right? When he's like, "Hey, we need to make change in the work comp system to protect employers when it comes to these big issues.”
And so you can imagine this summer, we would have our popcorn. We're excited to know like, what is important to all of our clients? Some topics will be wage threshold. We've seen the split code for construction companies that I work with a lot. That wage threshold is crept up year after year. There'll be
recommendations on other topics that could be part of a reform in the future. And then in September, again, that's when the base rates get officially published, but we don't think that these carriers are waiting for that day, right? They're already underwriting based on future knowledge.
AB: Okay, they have the data and why would they sit on it, right?
KH: Great point, they're not sitting on it. If you're insured that has a renewal in July and your carrier right now is looking at this math, they're probably going to underwrite based on what they predict.
AB: That makes sense. All right, so what happens in October?
KH: In October, it all starts over again. So the base rates are locked. The Bureau now has this new calendar where they can collect data starting in October that they're going to, again, make a recommendation on in the next April. So next April of 2026, I thought of a theme for this podcast would be like, what are the holidays for work comp in California?
AB: Different kind of holiday, yeah.
KH: What would be like the holiday song we sing? Like, “Oh, the base rates.”
AB: I love it; you should definitely come up with a song. Yes, okay, so with all of that said, what do you expect to see in the coming months and how do you recommend California employers prepare for what we assume there's going to be changes, right? So what are you recommending to your client?
KH: For all the listeners out there that are not insureds, you're not a business owner, you can tune out. This is for everybody that is worried about workers' compensation premiums. Forget about the popcorn,
forget about the calendar, prepare now. There's so many things we can be doing to add more controls, to look at your risk profile to brag to these insurance carriers. Regardless of the base rates, regardless of the recommendation, what's in control, what we have in front of us is a chance to constantly be proactive. And so, yes, there's a recommendation. Yes, rates might go up, but there's a lot of work to be done. And Rancho Mesa, we are so excited that we have a claim advocate, that we have a safety app, that we have different things that we can implement that are helping our clients shape this submission, their risk profile to show to these underwriters to say, “Hey, regardless of base rates, regardless of increases, we deserve this. This is where we should be.”
So that's, it's kind of like the, here's the popcorn, but let's take the popcorn off the table and let's go to work.
AB: Yeah, and I think that that's something that Rancho Mesa continues to offer to all of our clients. And it's something that we're always focused on, regardless of what the industry is doing. I mean, if rates were going down, we would still be asking our clients and providing them resources to do better, right? We're constantly offering trainings and helping with different tools and making sure that their employees are safe and that we can minimize any work comp injuries. So, I guess it's almost like regardless of what the industry is doing, we're going to stay the course. We're going to continue to do what we've always done and that is to really make our clients the best that they possibly can be.
KH: 1000%. Rain or shine, we're doing the same thing and that's what we hope that, you know, any other company out there that's looking for more action, that's what we want to do and you can still smell the popcorn if, it smells really buttery.
AB: It does. So Kevin, if listeners have questions about their potential workers' compensation insurance rate increases or anything about what's happening, what is the best way to get in touch with you?
KH: I have a direct line at (619) 438-6874. You can find me on LinkedIn. I'm on there a lot trying to navigate and get myself out there. So yeah, thank you.
AB: All right. Well, Kevin, thanks for joining me in Studio One.
KH: Thank you.
AB: Thanks for tuning in to our latest episode produced by Studio One. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at ranchomesa.com and subscribe to our weekly newsletter.