ACRAMENTO, June 19 — Across the country, the cost of workers' compensation insurance is soaring at the highest rate in nearly a decade, adding yet another heavy burden on businesses and the struggling national economy.

The governors of Florida, West Virginia and Washington have called special sessions of their Legislatures this year to find ways to contain costs, and elsewhere, thousands of bills on workers' compensation have been introduced.

The system covers 127 million workers nationally but is regulated state by state, with no federal oversight. Unlike with Medicare and Medicaid, Congress has no role in the regulation of workers' compensation.

Nationwide, the average cost of workers' compensation insurance has risen 50 percent in the last three years, according to Robert P. Hartwig, the chief economist at the Insurance Information Institute, a trade group in New York.

But nowhere in the country have prices been rising faster and with more debilitating impact than here in California. The average cost of workers' compensation insurance here has nearly doubled over the past three years, said David Bellusci, the chief actuary of the Workers' Compensation Insurance Rating Bureau in San Francisco, another insurer-backed organization.

As a result, dozens of businesses in California — big and small — have laid off workers, according to state officials and business leaders. Some businesses have closed and a few have moved to other states where insurance costs have not risen as much.

Prices are escalating, government and industry officials said, because of rising medical and legal costs; a recent devastating price war by insurers; and, many insurers and business executives say, a significant amount of fraud.

In the last few years, the cost of almost all kinds of insurance has been rising sharply. But workers' compensation insurance, which pays for treatment of on-the-job injuries and lost wages, is a particular problem because its purchase is mandatory. Businesses cannot trim their workers' compensation coverage to save money because, every employee must be fully insured.

"The only way to reduce your cost is to reduce your payroll," said Allan Zaremberg, the president of the California Chamber of Commerce.

Part of the problem has been created by the insurers and the boom-and-bust cycle of their industry.

In the mid-90's, expenses for workers' compensation insurers dipped and profits skyrocketed just as the stock and bond markets were at their most exuberant.

Now, after dropping their prices below the cost of covering claims in a fierce battle for market share, and confronted with dismal investment returns, the insurers are hitting their customers with astounding price increases. The pace of the premium increases picked up after the insurance industry lost at least $40 billion in the terrorist attacks on Sept. 11.

Another factor pushing up workers' compensation prices has been medical costs. While a shift away from manufacturing jobs to less-dangerous service work, broad improvements in safety and reductions in workers' eligibility for benefits has led to a drop of 36 percent in workers' compensation claims over the last decade, the average medical cost per claim has nearly doubled, to $15,300, Mr. Hartwig said.

In California, the average medical cost has nearly quadrupled, to $35,201 over the past decade, according to Mr. Bellusci.

As striking as the premiums seem, they do not capture the depth of the problem, said John Garamendi, the California insurance commissioner. Since taking office in January, Mr. Garamendi said, he has yet to find a business that is paying only the average price increases.

"I just talked to a maid service business that said it was looking at an increase from $20,000 to over $120,000 over a two-year period," he said.

In Los Angeles on Tuesday, trainers at the Hollywood Park thoroughbred racetrack told the insurance commissioner and a reporter that premiums for grooms and exercise riders had jumped 70 percent in the last year and had at least doubled for jockeys. Ed Halpern, the executive director of the California Thoroughbred Trainers, said some owners were shipping horses to racetracks in other states to reduce costs.