Should California Restaurants Join a Self-Insurance Group for Workers’ Compensation by January 1?

Why 2025 renewals feel different

After several steady years, California restaurant operators are seeing clear upward pressure on workers’ comp costs. The state approved a new pure-premium rate change in September 2025, and 2025 assessment factors are now in effect. For policies that renew January 1, those changes can hit immediately, which impacts budgets and cash flow.

“In self-insured groups, the power is in your hands. You have a direct line to the board, the administrators, and the decision-making process.” – Kaya Stanley, CEO & Board Chair

What’s the real difference between traditional insurance and self-insurance?

Traditional coverage buys convenience, but limits your influence. Group self-insurance, regulated by OSIP, lets restaurants share control over claims and safety — and capture upside if losses run low.

Why January 1 matters

• Avoid an automatic roll-over into higher pricing. Policies renewing after the Sept 2025 rate action reflect new insurer pricing; 2025 assessments also apply. Joining a group before January 1 aligns you with the new year rather than inheriting last year’s pricing structure.
• Clean transition. Switching at renewal avoids short-rate penalties and simplifies year-end audits.
• Full-year dividend eligibility. Most groups calculate dividends on the calendar year; joining now means you participate for all of 2025.
• Budget clarity. A January effective date locks your workers’ comp plan to your fiscal year.

Is self-insurance right for every restaurant?

It depends. Self-insurance fits operators with a steady safety record and clear documentation. You want visibility into claims and a real voice in how they’re resolved. If cash flow is tight or your losses are trending up, focus this renewal on tightening safety practices and records. Revisit self-insurance once your numbers and processes are in better shape next cycle.

How to evaluate your options in four steps

1. Check readiness. Pull 3 years of loss runs and confirm your experience modification factor (X-Mod).
2. Compare costs side-by-side. Get your insurer’s 2025 renewal quote and a group self-insurance estimate. Look at total cost (premium/contribution, assessments, admin fees, and potential dividends).
3. Review governance and guardrails. Ask any group you consider for OSIP filings, audited statements, and TPA/claims protocols.
4. Decide early. Approvals take time — start 60–90 days before renewal to be live on January 1.

Bottom line for January 1 decisions

For stable, safety-minded restaurants, a self-insured group is the smarter renewal this year. It gives you shared control of claims, clearer budgeting, and the chance to benefit from surplus returns. Joining on January 1 starts the year clean, avoids an automatic roll-over into higher insurer pricing, and puts you in the full-year dividend cycle.

If your cash flow is tight or losses are trending up, press pause. Use this renewal to tighten safety practices, close or mitigate open claims, and document procedures. Revisit self-insurance once your numbers and operations show steadier performance. Either way, make the decision on a 60–90 day clock so you are not forced into last-minute terms that limit your options.

Key Takeaways

• California’s 2025 cycle brings new pure-premium rates and updated assessments; the self-insured assessment is 8.5% of indemnity paid.
• Self-insurance offers stability, transparency, and potential dividends when losses are well-managed.
• The January 1 window is the best time to switch without mid-term penalties and to secure full-year participation.
• Evaluate readiness now — financials, safety record, claims history — and compare scenarios.