The California Insurance Commissioner adopted and issued a rate for workers’ compensation insurance that reflects California’s still-recovering economy.
The Commissioner’s action maintains the benchmark rate at $1.45 per $100 of payroll for workers’ compensation insurance unchanged from last year and within the reasonable actuarial range proposed by other experts, effective September 1, 2022.
Because of continued uncertainty regarding COVID-19 and its effects on the economy, this year’s pure premium rate remains the same as last year’s rate, and again does not include a COVID-19 factor.
The Commissioner will continue to review data in future pure premium rate filings to determine the long-term impact of COVID-19 claims as well as other experience data.
“We’re working hard to get California back to business as usual as people return to work,” said Commissioner Lara. “This year’s rate is on par with normal, pre-pandemic levels while still reflecting the long-term benefits of workers’ compensation reform passed by the State Legislature and signed by the Governor to reduce costs.”
Commissioner Lara’s decision results in an average advisory pure premium rate that is below the $1.56 average rate proposed by the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) in its filing with the Department of Insurance. This advisory rate follows a virtual public hearing that was convened on June 14, 2022 and a careful review of the testimony and evidence submitted by stakeholders.
The pure premium rate is only advisory, as the State Legislature has not given the Commissioner rate setting authority over workers’ compensation rates. The average advisory pure premium rate level of $1.45 approved by the Commissioner is about 18 percent lower than the industry-filed average pure premium rate of $1.77 as of January 1, 2022.
The Commissioner issued emergency rules in June 2020 allowing businesses to reduce costs for workers whose duties changed to lower-risk classifications or were furloughed due to the pandemic.
Late last month, the Commissioner issued an Order directing the WCIRB to continue implementing the rule he adopted in 2020 which excludes COVID-19 claims from being used in calculating experience modification rates from December 1, 2019 forward.