The Workers’ Compensation Insurance Rating Bureau voted to ask  California’s Insurance Commissioner to increase workers’ comp insurance rates by 11.2%.

Catherine Montgomery

That’s not just bold. It’s obscene, especially coming from the WCIRB that gets its funding exclusively from insurers.

According to the 2025 State of the Line report from the National Council on Compensation Insurance, workers’ compensation is already one of the nation's most profitable lines of insurance. Costs are rising only moderately, and insurers have a mountain of excess reserves — $16 billion worth.

As insurance industry insider Joe Paduda put it, “WC is still way too expensive; declining frequency, flat medical inflation and gigantic excess reserves clearly indicate insurers are making bank on WC.”

As someone who works with and advocates for insurers and their vendors (and accuses providers who treat injured workers of “hoovering” money from insurers), Paduda is not one to overstate the profitability of workers’ comp for insurers:

• Net written premium growth dropped 3.2%.
• Premiums are expected to drop another 6.1% in 2025.
• Medical cost inflation is flat.
• Claim frequency is falling.
• The industry has a combined ratio of 86%, meaning insurers are raking in premiums while paying out far less in benefits and overhead.

Translation: Insurers are getting richer, and the WCIRB wants to squeeze even more dollars from California employers.

Insurers are drowning in profit. So why is the WCIRB crying poor?

Yes, California’s workers’ comp system is more expensive than in other states, but that’s by design, thanks to California Senate Bill 863. This law handed insurers sweeping control over every aspect of an injured worker’s claim. In California, insurers:

• Choose the doctors through restrictive medical provider networks. 
• Dictate treatment via an opaque utilization review process.
• Shrug off fee schedules and manipulate reimbursement rates through discount contracts and a rigged payment appeals system.

The California Division of Workers’ Compensation, a regulator in name only, stands guard over the insurers’ cash cow.

Instead of protecting providers’ and injured workers’ legal rights, the DWC acts as an enforcer in a state-sanctioned protection racket, shielding insurers from scrutiny. At the same time, claims administrators crush providers under layers of bureaucracy and underpayment.

With SB 863, insurers — most of which are national entities raking in profits from multiple states — got everything they asked for. Now, bloated with profits and swollen reserves, they have the gall to plead poverty and demand that employers pay more.

Reality check: Calif. workers’ comp is a ticking time bomb

The unfortunate reality is that insurers, third-party administrators, vendors and private equity investors are gutting California’s workers’ comp system from the inside out.

By weaponizing control over treatment and reimbursement, these entities are driving doctors away, which can only lead to an eventual system-wide collapse.

Clinics are closing, physicians are walking away, and fewer and fewer are willing to navigate a DWC-rigged system that obstructs treatment and drains their practices financially.

The ultimate irony? The rate hikes will come not because insurers are struggling, but because there will be no physicians left who are willing to treat injured workers. When that day comes, the real costs — human and financial — will land squarely on the shoulders of California’s employers and injured workers.

For now, it’s absurd for insurers, through their WCIRB mouthpiece, to demand higher rates while they rake in profits nationwide. If anything, California employers should demand lower rates, considering the dubious value they’re getting in exchange for their premium dollars.

Catherine Montgomery is the co-founder and CEO of daisyBill, a provider of workers' comp end-to-end revenue cycle management software. This post appears with permission.