CA Commissioner of Insurance Recommends Rate Premium Decrease

Sacramento, CA (WorkersCompensation.com) – The California Commissioner of Insurance David Jones has recommended to lower the advisory pure premium rate mid-year.

No carrier has to implement the advisory pure premium rate by the Workers’ Compensation Insurance Rating Bureau (WCIRB), which lessens the standard to $2.02 per $100 of payroll for workers' compensation insurance as of this July 1 — making California’s number 16.5 percent less than the average pure premium rate of $2.42 California insurers filed on January 1, 2017. 

Jones announced the news in a California Department of Insurance (CDI) press release, saying "a reduction in the pure premium rate reflects a reduction in the cost to insurers of providing workers' compensation insurance, which benefits California's business economy if insurers lower their pricing."

"However, there is no legal requirement that these insurers pass these cost savings onto employers, so workers' compensation insurers continue to file pure premium rates that are higher than the pure premium rate warranted by their costs," according to the release.

WorkersCompensation.com’s News Center reported on the mid-year filing in the beginning of April, and Project Director for the Survey Research Center at the University of California at Berkeley Frank Neuhauser said neither the bureau or the department play an active role in decreases or increases.

“They are basically passive observers of market forces, legislation, regulation and case law, as well as underlying trends in medical inflation,” he said, adding, “The declines in CA are mostly driven because rates were too high in the recent past, the bureau and CDI overshot the mark, anticipating higher costs than developed.”

The California Department of Insurance reported, “WCIRB claims the downward medical loss development is in part driven by continued acceleration in claim settlement, decreasing indemnity claim frequency, and lower than projected loss adjustment expenses,” according to the press release, which further notes the WCIRB will assess workers' compensation insurance costs this summer and fall as it prepares to make its 2018 pure premium rate benchmark recommendation.

“That filing will provide an opportunity to assess whether medical costs continue to be lower and what changes, if any, there are in other costs in the system,” according to the press release. 

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