State Compensation Insurance Fund, the state’s largest workers’ compensation insurer, has announced it will hike employer premiums an average of 9 percent starting Jan. 1.

The hike is expected to slam the insurer’s more than 200,000 employer policyholders amid a worsening economy. Some policyholders in high-risk industries or with a bad claims history can expect rate hikes well into the double-digits.

State Fund, a San Francisco-based quasi public organization, filed its first rate increase in five years last week. The move came shortly after state Insurance Commissioner Steve Poizner recommended a 5 percent increase in premiums because of rising medical costs.

State Fund Chief Executive Jan Frank said the rate increase was necessary because medical costs for claims have been rising at a 12 percent annual rate even as the number of filed claims has stabilized.

Established in 1914 by the California Legislature, State Fund has traditionally been the insurer of last resort. During the most recent workers’ compensation crisis earlier this decade, it gained more than a 50 percent share of the insurance market as private insurers withdrew.

Since then, as employer premiums have sharply declined and competition has increased, State Fund’s market share has fallen back to more traditional levels, between 20 percent and 25 percent.