Most business owners don't spend much time thinking about workers' compensation until renewal season arrives.

For years, many California employers have operated in a relatively stable workers' comp environment. Premiums were predictable, carrier competition was strong, and coverage was generally easy to obtain. Workers' comp became something businesses simply renewed each year without much thought.

But that environment may be starting to change.

In September 2025, California saw an approved advisory workers' compensation rate increase of 8.7%. Now, the Workers' Compensation Insurance Rating Bureau (WCIRB) has proposed another 10.4% increase effective September 2026. While the final number has not yet been determined, the bigger story isn't the filing itself, it's what these changes may signal about where the workers' comp market is heading.

We recently discussed this topic on The Martino Minute Podcast. If you prefer reading, here's what business owners should understand.

The Headline Doesn't Tell the Whole Story

One of the biggest misconceptions surrounding workers' compensation rate increases is that every business will see the same increase.

That's not how workers' comp pricing works.

When the WCIRB proposes an 8% or 10% increase, they're referring to the overall amount of premium needed across the system. Different industries and classification codes can experience very different outcomes.

Some businesses may see modest increases.

Some may see much larger increases.

Others may even see decreases.

The important takeaway is that a proposed 10.4% increase does not automatically translate into a 10.4% increase for your business. What matters is how your classification codes, claims history, and overall risk profile fit into the larger picture. 

What Business Owners Are Starting to Notice

While many employers focus on the proposed rate increase itself, the more important story is what businesses are beginning to experience in the marketplace.

For years, California operated in what is commonly called a "soft market" — one where renewals were easy, underwriters were flexible, and competition kept options plentiful.

When markets stay soft for long periods of time, businesses naturally become accustomed to those conditions. But as markets begin to shift, business owners often start noticing subtle changes before they see dramatic premium increases.

Renewals become more difficult.

Carriers ask more questions.

Fewer insurance companies are interested in quoting certain risks.

Discounts become harder to obtain.

Options begin to narrow.

Those are often the first signs that the environment is changing.

Why Timing Matters

One of the most common mistakes businesses make is waiting until 60 to 90 days before renewal to start evaluating their workers' compensation program.

While that may have been sufficient during years of stable pricing and abundant market competition, changing market conditions can make that approach increasingly risky.

If workers' comp costs are rising and insurance carriers are becoming more selective, waiting until renewal often leaves businesses with fewer options. At that point, the conversation typically becomes focused on finding the best available price rather than improving long-term outcomes.

Businesses that begin planning six to nine months before renewal have more time to:

• Review safety programs
• Identify and address claims trends
• Strengthen risk management practices
• Evaluate alternative workers' comp structures
• Explore solutions that may not be available at the last minute

The businesses that typically navigate changing market conditions most successfully are not the ones reacting at renewal. They're the ones preparing well before it arrives.

Preparation creates options.

Don't Wait for Renewal Shock

This isn't about one rate filing or one percentage increase. It's about recognizing that the workers' compensation environment may be changing after a long period of stability.

For years, many businesses operated in a market characterized by predictable pricing, abundant carrier competition, and relatively easy renewals. When conditions remain stable for long enough, it's natural to assume they will continue.

History suggests otherwise.

Insurance markets move in cycles, and businesses that pay attention early are often better positioned to adapt when conditions begin to change.

That doesn't mean it's time to panic.

It means it's time to pay attention.

Looking Ahead

In our next article, we'll explore what's driving these rising workers' compensation costs—from medical inflation and litigation trends to cumulative trauma claims and other factors that many businesses never see.

If you'd like a second set of eyes on your current workers' comp structure, we'd be happy to help evaluate your options before your next renewal.

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