The WCIRB Governing Committee voted to authorize the WCIRB to submit a January 1, 2017 Advisory Pure Premium Rate Filing to the California Insurance Commissioner.
The Filing will propose advisory pure premium rates that average $2.26 per $100 of payroll, which is 11.0% less than the corresponding industry average filed pure premium rate of $2.54 as of July 1, 2016, and 2.6% less than the average approved July 1, 2016 advisory pure premium rate of $2.32. This marks the fourth consecutive Filing that the WCIRB has advised a decrease in pure premium rates, totaling -18.6% when compared to the average of the approved January 1, 2015 advisory pure premium rates.
In his presentation to the Governing Committee, WCIRB Chief Actuary Dave Bellusci noted that the indicated January 1, 2017 average advisory pure premium rate, while only slightly below the July 1, 2016 average approved pure premium rate, is -7.5% from the average January 1, 2016 pure premium rate. Mr. Bellusci also identified some of the factors contributing to the reduced indicated pure premium rate:
1) Medical losses on 2014 and prior accident years continue to develop favorably
2) Medical claim costs on 2015 accidents are emerging at lower than projected levels
3) Indemnity claims are settling at quicker rates than in the recent past
4) Forecasts of future wage level growth in California have increased
Despite these positive trends, Mr. Bellusci acknowledged that post-SB 863 loss adjustment expenses (LAE) and indemnity claim frequency continue to emerge higher than projected, but these increases have been more than offset by the favorable medical loss trends.
The WCIRB will submit its January 1, 2017 Pure Premium Rate Filing to the California Department of Insurance (CDI) on or around August 19, 2016. The CDI will schedule a public hearing to consider the Filing and once the Notice of Proposed Action and Notice of Public Hearing is issued, the WCIRB will post a copy in the Publications and Filings section of the website.
For More Information please review the Governing Committee Meeting Presentation – August 10, 2016 and the Regulatory and Pure Premium Rate Filings