What is the WCIRB?

The Workers' Compensation Insurance Rating Bureau of California (WCIRB) is a private, nonprofit association of insurance companies licensed to transact workers' compensation insurance in California. Organized in 1915, the WCIRB operates under the authority of the California Insurance Code and serves as the Insurance Commissioner's designated statistical agent for workers' compensation insurance.

The WCIRB is comprised of over 400 member insurance companies. No public money is used to fund its operations. The WCIRB employs approximately 175 people, with its headquarters located in San Francisco, California.

Core Functions of the WCIRB

  • Data Collection and Analysis: Collects premium and loss data on every California workers' compensation insurance policy, examines policy documents, inspects insured businesses, and performs test audits of insurer payroll audits and claims classification.
  • Rate Development: Develops proposed advisory pure premium rates for submission to the California Insurance Commissioner for approval.
  • Classification System: Develops and assigns classification codes that group distinct and identifiable occupations, industries, or businesses for rating purposes.
  • Experience Modifications: Calculates experience modification rates (EMR) for qualifying employers based on their loss history.
  • Regulatory Administration: Administers the Commissioner's workers' compensation regulations contained in the California Workers' Compensation Uniform Statistical Reporting Plan and the California Workers' Compensation Experience Rating Plan.

How Workers' Compensation Rates Are Set

California operates under an "open" rating system, meaning individual insurance companies set their own rates based on their ability to adequately cover losses and expenses. However, the WCIRB plays a central role in this process by developing advisory pure premium rates.

The Rate-Setting Process

  1. Data Collection: The WCIRB collects premium and loss data from all insurance companies for every California workers' compensation policy.
  2. Analysis: Actuaries analyze historical data to project future losses and determine appropriate rate levels for each industry classification.
  3. Filing: The WCIRB proposes advisory pure premium rates to the California Insurance Commissioner, typically at least once per year (approximately six months before the rates become effective).
  4. Public Hearing: A public hearing is held where stakeholders can provide testimony on the proposed rates.
  5. Commissioner Decision: Within 30 days of the public hearing, the Insurance Commissioner issues a decision accepting, rejecting, or modifying the proposed rates.
  6. Insurer Implementation: Insurance companies use the approved advisory rates as a starting point, adding their own factors for administrative costs, or develop their own rates using proprietary methods.

Advisory Pure Premium Rates

Advisory pure premium rates are expressed as a rate per $100 of payroll. These rates reflect:

  • Expected losses an insurer will pay in benefits due to workplace injuries
  • Costs for adjusting and settling workers' compensation claims

Important: Pure premium rates do not include administrative overhead costs. As a result, the actual rates insurers charge employers are typically higher than the advisory pure premium rates.

2025-2026 Rate Information

Current Average Rate (September 1, 2025): $1.52 per $100 of payroll

This represents an 8.7% increase from the September 1, 2024 rates, marking the first meaningful upward adjustment in nearly a decade. The WCIRB had recommended an 11.2% increase, while the Insurance Commissioner approved the 8.7% figure.

2026 Updates

Effective September 1, 2026, the WCIRB will expand pure premium and expected loss rates to three decimal places, providing more precise rate calculations.

Classification Codes

The WCIRB Standard Classification System contains approximately 700 industry classifications that describe groups of employers whose businesses are relatively similar. Each classification is assigned a three or four digit numerical code.

Classification codes are crucial because they determine the base rate applied to an employer's payroll. Higher-risk industries (such as construction) have higher rates than lower-risk industries (such as office work).

How Classifications Work

  • Each employer's business is assigned to one or more industry classifications
  • The WCIRB develops and the Insurance Commissioner approves an advisory pure premium rate for each classification
  • Premium is calculated by multiplying the rate by the employer's payroll for that classification

Dual Wage Classifications

Some classifications, particularly in construction, use dual wage thresholds where employees earning above a certain hourly rate receive a lower classification rate. For 2026, the WCIRB has approved proposals to increase the hourly wage threshold for 13 out of 16 dual wage classifications by $2 to $5 per hour, effective September 1, 2026.

Experience Modification Rate (EMR)

The Experience Modification Rate (also known as X-Mod or EMR) is a factor that adjusts an employer's premium based on their actual loss history compared to the expected losses for their industry.

Basic Formula

EMR = Actual Losses / Expected Losses

  • EMR of 1.0: Equals the industry average
  • EMR above 1.0: Increases premiums (worse than average safety record)
  • EMR below 1.0: Decreases premiums (better than average safety record)

Eligibility

Employers paying at least $11,000 in premium are assigned an experience modification. The modification is calculated from payroll and loss information that insurance companies submit to the WCIRB annually.

Experience Period

Experience modifications are calculated on a rolling 3-year basis. The experience period begins four years and nine months prior to the rating effective date and terminates one year and nine months prior. Each year, the oldest policy information drops out and the newest year joins the calculation.

Primary Loss Thresholds

Since January 1, 2017, an employer's primary losses vary based on the size of the employer. There are over 90 different primary loss values ranging from $4,500 to $75,000. The experience rating formula places full weight on the primary portion of losses, with no weight given to excess losses. Additionally, the first $250 of each claim is removed from the calculation.

2026 Experience Modifications

The WCIRB has issued over 94 percent of the January 1, 2026 experience modifications that insurers, agents/brokers, and policyholders rely on for January policy renewals.

How Your Premium Is Calculated

Understanding how your workers' compensation premium is calculated can help you manage costs:

Basic Premium Formula

Premium = (Payroll / 100) x Classification Rate x Experience Modification

Example Calculation

Scenario: Office employer with $500,000 annual payroll

  • Classification Rate: $0.50 per $100 of payroll
  • Experience Modification: 0.95 (5% below industry average)

Calculation:

($500,000 / 100) x $0.50 x 0.95 = $2,375 annual premium

Factors That Affect Your Premium

  • Payroll Amount: Higher payroll means higher premium
  • Industry Classification: Higher-risk industries have higher rates
  • Claims History: Past claims affect your experience modification
  • Safety Programs: Some insurers offer credits for safety programs
  • Insurer Selection: Different insurers may offer different rates

WCIRB Resources

The WCIRB provides several tools and resources for employers, insurers, and other stakeholders:

  • Classification Search Tool: Look up classification codes for your business
  • Experience Modification Estimator: Estimate your experience modification based on your payroll and loss history
  • Pure Premium Rate Filings: Access current and historical advisory pure premium rates
  • Research and Reports: Studies on California workers' compensation trends and issues

For more information, visit the official WCIRB website at wcirb.com