The California Insurance Commissioner adopted and issued lower rates for workers’ compensation insurance, as businesses continue to recover from the COVID-19 pandemic and rehire workers – reducing the benchmark rate by $.05 to $1.41 per $100 of payroll for workers’ compensation insurance, effective September 1, 2021.
The recommended rate reduction is based on insurance companies’ cost data. The pure premium rate is only advisory, as the State Legislature has not given the Commissioner rate setting authority over workers’ compensation rates.
The newly approved average advisory pure premium rate level of $1.41 approved by the Commissioner is about 24.2 percent lower than the industry-filed average pure premium rate of $1.86 as of January 1, 2021.
This marks the eleventh consecutive reduction to the average advisory pure premium rate benchmark since January 2015.
Last year, the Commissioner resisted calls to add a COVID-19 surcharge to employers’ rates, citing uncertainty over the impact of the pandemic on future workers’ compensation claims and costs. The surcharge would have especially affected employers of farm workers, health care workers, grocery workers, and other front-line workers.
With workers’ compensation claims related to COVID-19 now falling amid the vaccine rollout and public health actions, this year’s pure premium rates again do not include a pandemic factor.
The decision results in an average advisory pure premium rate that is below the $1.50 average rate recommended by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) in its filing with the Department of Insurance.
The advisory rate was issued after a public hearing that he convened on June 7, 2021 and careful review of the testimony and evidence submitted by stakeholders.