California Workers’ Comp Loss Costs Keep Rising Despite Pandemic Disruption, CWCI Report Finds

OAKLAND, Calif.--(BUSINESS WIRE)--COVID-19 temporarily disrupted California workers’ comp loss trends but did not stop the steady growth in medical and indemnity claim costs, and a new California Workers’ Compensation Institute (CWCI) study indicates that medical costs may be accelerating in the post-pandemic era.

The study examines paid medical and indemnity loss trends on accident year 2016-2025 indemnity claims using insured and self-insured data from CWCI’s Industry Research Information System (IRIS) database. Claims were analyzed at seven stages of development, from 6 to 72 months post injury. The report also examines 24-month loss experience across five major industry sectors and across seven geographic regions. Among the key findings:

• The pandemic temporarily moderated initial loss costs but did not change the underlying trend. Average total paid losses at 6 and 12 months rose steadily through AY 2020 before leveling off in AY 2021 as more than 82,000 COVID-19 claims entered the California workers’ comp system. Growth resumed in AY 2022 and continued through AY 2024. At 24 months, losses continued to increase during the pandemic, though growth slowed to 1.2% in AY 2021 before rebounding, climbing 5.0% in AY 2022 and 2.3% in AY 2023.
• Medical losses have shown renewed growth since the pandemic. Average paid medical losses at 6 months jumped 15.1% for AY 2024 claims and the 12-month average rose 9.4%. Six-month data on AY 2025 claims show a 6.1% decline, but those claims are immature so results may change as more data is reported.
• Indemnity losses increased more consistently. Average paid indemnity rose at every development level and across every accident year, with increases ranging from 11.6% at 72 months to 51.6% at 6 months. Growth accelerated in AY 2022 following a record 13.52% increase in weekly temporary disability benefit rates tied to the State Average Weekly Wage, which surged coming out of the pandemic-driven recession.
• Industry differences were significant. Construction consistently had the highest 24-month total losses, reaching $49,947 per indemnity claim for AY 2023, nearly 57% above the statewide average of $31,892. Food Service, Agriculture and Health Care had substantially lower average total losses.
• Medical and indemnity costs showed different industry patterns reflecting differences in occupational risks and injuries, wages, treatment, and disability durations. For example, Construction had above-average costs for both loss components, while medical losses on Agriculture claims were slightly above the statewide average, but indemnity payments were well below. In contrast, medical losses on Health Care claims were far below the statewide average, but indemnity losses generally tracked the statewide trend.
• Regional differences were significant. The North Counties/Sierra had the highest average total losses for AY 2023 claims at 24 months, driven by high medical costs and the state’s second-highest indemnity payments. The Bay Area ranked second, largely because higher wages led to higher indemnity costs.

The report underscores the importance of looking beyond statewide averages when evaluating workers’ compensation costs, illustrating how factors such as occupational mix, wages, injury severity, treatment patterns, access to care, and disability duration can produce substantially different loss costs across industries and regions.

The study is based on IRIS data available to Institute members through CWCI’s Loss Development App, which provides interactive medical and indemnity loss data by accident year and development period, and by region and industry. The report, California Workers’ Compensation Loss Development: Medical & Indemnity Payments on AY 2016–AY 2025 Claims is free to CWCI members and is available to nonmembers for $21 by calling 510-251-9470.