The WCIRB has released its 2025 California Workers’ Compensation Losses and Expenses Report pursuant to Section 11759.1 of the California Insurance Code. The report is WCIRB’s annual accounting of what insurers actually paid out in benefits and expenses during the 2025 calendar year, and it includes payments made by the California Insurance Guarantee Association (CIGA) for calendar years 2013 through 2025.
The headline result is that California’s workers’ compensation insurers slipped into an underwriting loss for 2025. Direct earned premium totaled $15.4 billion, essentially flat with 2024’s $15.6 billion. Against that premium, insurers’ total incurred losses and expenses came to $15.7 billion, or 101.8% of earned premium, up from 98.6% in 2024. After accounting for an estimated 1.0% of premium in policyholder dividends, the report puts insurers’ pretax underwriting result at a loss of $430 million, or 2.8% of premium — a reversal from 2024, when insurers posted a modest underwriting profit of $118 million, or 0.8% of premium. (These figures reflect underwriting results only; they exclude investment income and taxes, so they understate insurers’ overall profitability.)
On the loss side, insurers’ incurred losses (paid losses plus the change in reserves, excluding CIGA) were $9.5 billion, or 62.1% of earned premium, up from 60.9% in 2024. Loss adjustment expenses — the cost of investigating, defending and settling claims — rose more sharply, to $2.7 billion or 17.5% of premium, up from 15.7% in 2024. Of that, allocated loss adjustment expense (costs tied to specific claims, largely defense and litigation costs) was 12.7% of premium and unallocated loss adjustment expense (general claims-handling overhead) was 4.9%. Combined with commissions, other acquisition costs, general expenses and premium taxes, insurers’ total expenses reached $6.1 billion, or 39.7% of premium, up from 37.7% in 2024.
Within total loss payments, the split between medical and indemnity benefits continued to shift toward indemnity. Medical benefits accounted for $5.2 billion, or 52% of total loss payments in 2025, versus $5.2 billion and 54% in 2024 — a flat dollar figure but a shrinking share. Indemnity (wage-replacement) benefits were $4.7 billion, or 48% of total loss payments, up from $4.4 billion and 46% in 2024; the 2025 indemnity figure includes $36 million in payments on COVID-19 claims.
Within the $5.2 billion in medical payments, physician services remained the largest component at $1.37 billion, though down slightly from $1.39 billion in 2024. Payments made directly to injured workers were essentially flat at $1.69 billion. Hospital payments (inpatient and outpatient combined) slipped to $0.55 billion from $0.57 billion. The standout mover was medical-legal evaluations, which rose to $0.48 billion from $0.45 billion, continuing a multi-year climb: medical-legal payments have grown from 6.4% of total medical payments in 2020 to 9.3% in 2025. The average cost of a medical-legal evaluation was $2,220 in 2025, up modestly from $2,219 in 2024 but well above the $2,037 average in 2022. Orthopedic evaluations make up roughly half of all medical-legal costs, but psychiatric and psychological/behavioral health evaluations remain the most expensive on a per-evaluation basis, averaging $3,778 in 2025. Pharmaceutical costs continued their long decline, falling to $0.05 billion, while medical cost containment program costs reported as medical loss held at $0.11 billion — though the report notes that a much larger and growing share of those program costs, $347 million in 2025, is now reported as loss adjustment expense rather than medical loss, up from $305 million in 2019.
On the provider side, the report’s medical transaction data shows hospital-based providers’ share of medical service payments continuing to shrink, from 19.6% in 2024 to 18.5% in 2025 (and from 21.7% as recently as 2020), while physical therapists, MD general practitioners and psychology/psychiatry/neurology providers each gained share. Among physician services specifically, evaluation and management services held steady at just over a third of physician payments, while physical medicine’s share continued to ease down, from 28.5% in 2024 to 27.3% in 2025.
On the indemnity side, $4.7 billion was paid out in 2025, dominated by temporary disability benefits (59.2% of indemnity paid) and permanent partial disability benefits (31.6%, split across the 0.25%–24.75%, 25%–69.75% and 70%–99.75% disability rating bands). Permanent total disability, death benefits, life pensions and vocational rehabilitation/education vouchers each accounted for roughly 2% or less of total indemnity. Vocational rehabilitation-related payments totaled $88 million, or 1.9% of all indemnity paid, essentially unchanged from 2024’s $85 million and 1.9% share, with about 90% of that spending going toward education-related benefits.
One figure likely to draw attention from claims and defense professionals: fees paid to applicant attorneys jumped to $506 million in 2025 from $420 million in 2024, an increase of roughly 20%. The report notes these fees are typically embedded within indemnity awards or settlements and cannot always be broken out separately, so this figure is derived from a subset of insurers able to report a comprehensive breakdown.
The report’s injury-detail exhibits, based on 2023 policy year data, reinforce a theme WCIRB has flagged in its other recent publications: cumulative trauma claims are disproportionately costly. Claims coded as cumulative injury, not otherwise classified, made up just 6.9% of claims by cause of injury but 9.9% of total incurred losses. Among permanent disability claims specifically, slip-and-fall injuries were both the most frequent and the most expensive injury category, accounting for 27.9% of total incurred losses on permanent disability claims and averaging $105,965 per claim — well above back injuries ($64,506 average) and other cumulative trauma categories such as carpal tunnel and repetitive motion injuries ($41,501 average) or other cumulative injuries generally ($34,757 average). By nature of injury, strains and tears remained the single largest category, accounting for 26.7% of total incurred losses, and by body part, injuries involving multiple body parts (15.7%) and the lower back (11.1%) topped the list.
Taken as a whole, the 2025 report depicts a system where premium has plateaued but claim costs have not: rising loss adjustment expenses, a growing medical-legal cost component, a sharp jump in applicant attorney fees, and continued indemnity severity growth combined to push insurers into their first underwriting loss in several years. That trajectory is consistent with the rate increases the California Department of Insurance has approved and WCIRB has since proposed for the September 2026 filing.
This summary is provided for general informational purposes only. Readers should consult the full WCIRB report for complete data, methodology and the standard conditions and limitations that accompany all WCIRB publications; the WCIRB cautions that the report reflects only the experience of insured employers and cannot guarantee the accuracy of underlying data submitted by individual insurers.