By Bill Zimmerman, Owner/Broker, Insight Agency Insurance Services
There is upward pressure on California workers' comp rates. The state's benchmark rate went up an average of 6.6% for policies starting on or after September 1, 2026. Two ways to control premium are shopping broadly for the best price each year and, more importantly, preventing workers' comp claims with a strong employee safety program.
Each insurance company sets its own workers' comp rates, but they all start with something called "pure premium." That's the expected cost of claims for each payroll class across all employers in the state, expressed as a rate per $100 of payroll. This year the Insurance Commissioner adopted an average of $1.65 per $100, up 6.6%. Some classes went up more and some less. The rate is advisory, so carriers adjust it based on their own experience and expertise with each class.
Shopping the best carriers is important, and your agent should do it for you every year. If your agent isn't getting you competitive quotes, you may need a new agent. Moving to a better-priced carrier can save as much as 20% in premium.
Your X-Mod Is the Bigger Lever
The bigger lever is preventing claims, because claims drive your experience modification rate, or X-Mod. Your X-Mod compares your claims to the average for businesses in your class, and it multiplies your premium. With a 0.80 mod you pay 20% less than the base rate. With a 1.30 mod you pay 30% more. On a $60,000 workers' comp premium, the difference between a 0.85 mod and a 1.25 mod is about $24,000 a year.
Each claim counts in your mod for three years, so one avoidable injury can raise your premium for three renewals in a row. A clean record keeps paying off year after year.
Two details matter most. Frequency hurts more than severity: five small claims can raise your mod more than one large claim with the same total cost. And open claims count at their reserve, not their final cost, so an inflated reserve that never gets adjusted inflates your mod.
That's why we review your loss runs and experience rating worksheet claim by claim. We look for duplicate or misassigned claims, push adjusters to reduce stale reserves, press to close resolved claims before the carrier reports to the WCIRB, and check that payroll is in the right class codes.
"A California business saves money on premium with lower workers compensation experience rating (X-Mod or E-Mod) is done through preventing injuries. Foreman training, safety orientations and supervising for safety are key safety activities. More advanced worker safety systems include systems of incentive and disincentives for safety activities."
— Bill Zimmerman, Owner/Broker
Build a Strong Safety Program
Following California's mandatory Injury & Illness Prevention Program (IIPP, or Safety Program) is a good way to organize worker safety. Cal/OSHA requires every IIPP to cover eight elements:
- Responsibility: Assign a Safety Officer with the authority and management support to control exposures to worker injury.
- Compliance: Oversee safe practices, including incentives and/or disincentives for violating the employer's safety protocols.
- Communication: Keep it two-way. The employer discloses hazards and safe practices, and employees are responsible for reporting unsafe conditions or practices.
- Hazard Assessment: Inspect and evaluate the workplace for unsafe conditions or practices.
- Accident Investigation: Take a hard look at the underlying cause of any accident and how to keep it from happening again.
- Hazard Correction: Fix hazards, with urgent matters getting prompt attention.
- Training: Give safety orientations (new hire, new duties, new equipment), keep up ongoing safety activities, and supervise so employees don't cut corners on safety.
- Recordkeeping: Keep OSHA 300 injury logs. Ideally, all foremen and department heads also document trainings, inspections and safety improvements.
Two habits make a big difference on top of the IIPP. Report injuries the same day, which keeps medical costs down and reduces the chance of litigation. And run a return-to-work (light duty) program, which turns lost-time claims into much cheaper medical-only claims.
Most California employers now also need a written Workplace Violence Prevention Plan, which can be part of the IIPP.
Your workers' safety comes first, and it's also the best way to keep workers' comp premiums down. Call us for a review of your X-Mod, a full market check at renewal, and help putting safety controls in place.
This page provides general information only and is not legal or tax advice. Insight Agency Insurance Services, CA License #0B38235.