Insurance Commissioner Dave Jones adopted and issued a revised advisory pure premium rate, lowering the benchmark to $1.94 per $100 of payroll for workers’ compensation insurance, effective January 1, 2018.
This is 17.1 percent less than the average pure premium rate of $2.34 California insurers filed as of July 1, 2017.
This decision results in an advisory pure premium rate that is slightly below the $1.96 average rate recommended by the Workers’ Compensation Insurance Rating Bureau (WCIRB) in its filing. Jones issued the advisory pure premium rate three weeks after a public hearing and careful review of the testimony and evidence submitted.
His adoption is only advisory, as the commissioner has no rate authority over workers’ compensation insurers.
“The continued decreases in costs to insurers should be passed along to employers through lower rates,” said Insurance Commissioner Dave Jones. “Workers’ compensation reform legislation should require that system cost savings be passed onto employers in the form of lower rates– the law does not require this currently.”
The WCIRB’s pure premium advisory rate filing demonstrated continued decreases in costs in California’s workers’ compensation insurance market.
The pure premium advisory rate reduction is based on insurers’ cost data through June 30 of this year. Insurers’ net costs in the workers’ compensation system continue to decline as a result of SB 863, SB 1160, and AB 1244 enacted by the Legislature and Governor Brown.
The WCIRB notes continued favorable medical loss development including acceleration in claim settlement.
The WCIRB will evaluate workers’ compensation insurance costs again in the summer and fall of next year when it files its pure premium rate benchmark recommendation with the Department of Insurance. 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.
The purpose of the pure premium benchmark rate process is to review costs in the workers’ compensation insurance system and to confirm that rates filed by insurance companies are adequate to cover benefits for injured workers.