Workers' compensation insurance rates are climbing sharply in the North Bay, a trend that the region’s brokers attribute to the whittling away at system reforms, rising health care costs and increasing medical utilization that have helped inspire a third round of recommended rate increases by California's insurance commissioner.

In an acknowledgment that the market is increasingly tightening, Insurance Commissioner Dave Jones approved  a recommendation by the Workers Compensation Insurance Rating Bureau to boost rates by 8.26 percent, to $2.49 per $100 of payroll for new and renewed policies starting July 1. Experts said that increase comes on top of a 37 percent increase OK'd in January.

Carriers are free to set their own rates, and the bureau’s rates are merely advisory. Yet experts say the combined increases are leading to 50 percent and sometimes higher increases in rates for some employers.

Most employers can expect premium increases to the tune of 8 percent to 20 percent, according to Doug Dilley, managing partner at George Petersen Insurance Agency in Santa Rosa. Much of the cost drivers include the cost of health care, an increase in permanent disability claims, increased use of prescription narcotics and an ever-increasing number of liens filed by providers, brokers said.

"The reason why they're saying rates should be higher is because at the end of the day, costs are going up," said Debra Costa, vice president of Heffernan Insurance Brokers in Petaluma. She added that while the reforms of 2004 helped keep costs down, they have been slowly whittled away and that medical inflation has caught up to the reforms. "It's cyclical in nature. We're in the beginning of that cycle of costs going up," she said.

Mike Ryan, a principal with Edgewood Partners Insurance Center, or EPIC, in Petaluma, agreed, noting that after several years of falling rates following major reforms in 2004, rates have steadily climbed upward.

"Insurance companies are looking to offset years of increasingly higher costs for medical and indemnity claims," Mr. Ryan said. "The resultant rate increase is due to a combination of base rate increases punctuated with a marked reduction in credits and premium discounts. This deadly combination can result in substantial increases for some insureds."

Last year, insurance companies spent $1.26 on claims and expenses for every dollar taken in from incoming premiums, according to the Rating Bureau.

"Every comp carrier almost up and down the line is saying the results in California are all underwriting at a loss," Mr. Dilley said. And while a number of carriers are delaying the increase in rates for July 1, come October or early next year, an increase will be inevitable, Mr. Dilley added.

In light of the looming rate hikes, brokers urged employers to take a number of measures to try and offset the costs, including taking a close look at hiring practices, adopting effective wellness programs and developing a closer relationship with medical providers.

"Something that doesn't happen as much as it should is employers need to have relationships with the providers," Ms. Costa said. "Employers do have a lot of control, and I don't think employers do that enough. Just having an interview with the clinic and providing job descriptions, so the clinic knows your company well, can be really helpful."

Ms. Costa added: "The more information the clinic has, the more easily they can treat and turn to modified duties. The clinics are a customer of the employer."

Mr. Dilley said he's seen increased attention paid to hiring practices, in an effort by employers to ensure a new employee is competent enough and thus less likely to get injured on the job.

"There's absolutely been an increase in that area," he said.