SACRAMENTO, Calif.—California Insurance Commissioner Steve Poizner said Wednesday he will recommend holding workers compensation rates steady despite a request to raise them 23.7%.

After holding hearings on an April request by the California Workers’ Compensation Insurance Rating Bureau to raise rates 23.7%, Mr. Poizner cited the example set by self-insured employers for his decision against recommending any increase.

Self-insured employers have proved that an increase is not necessary because their costs continue to decline, the commissioner said. In contrast, insurers have not implemented efficiencies that self-insured employers have adopted, he added.

Insurers have sought rate increases averaging in the high single digits, the commissioner said.

Mr. Poizner also said he will set up a workers comp advisory group to recommend how the system can operate more effectively.

California’s insurance commissioner cannot force insurers to set certain rates; he can only recommend they do so.