Insurance costs for auto, garage liability, EPLI and Workers’ Compensation (WC) continue to climb. For WC policies effective Sept. 1, 2025, the California Department of Insurance has approved a rate increase of about 9%. Other states are also in the same league. It is a good time to learn how premiums are calculated and how to reduce them. Background Workers’ Compensation (WC) insurance is mandatory in the United States and many other countries. It ensures employees receive medical treatment and disability benefits for workplace injuries, while protecting employers by providing immunity from employee lawsuits for alleged negligence. WC premiums are paid entirely by employers and represent a significant, manageable business expense. Rate increases are attributed to significant increases in legal expenses (see the ads on the sides of the highways), rising medical and claims costs, more cumulative trauma claims and increased claim adjustment expenses. Cost Containment WC premiums are calculated using a base rate that reflects job duties, payroll size, and the number of employees. This base rate is then adjusted by an experience modifier (X-Mod) that is directly tied to the frequency and severity of workplace injuries. Losses are Workers’ Compensation, Experience-Modifier, and How Litigation Is Adding to Your Claims By Sam Celly, MS, JD, CSP, President and CEO, Celly Services Inc. 23
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