California Proposes 16% Workers’ Comp Rate Increase

The Workers’ Compensation Insurance Rating Bureau of California indicated it plans to submit a filing to the California Department of Insurance (CDI) recommending a 16 percent increase in pure premium rates effective Jan. 1, 2009.

According to the association, nearly 11 percent of the increase would reflect increasing medical costs, about 3 percent would reflect increased loss adjustment expenses and about 2 percent would reflect an annual adjustment to the experience rating off-balance correction factor.

If the WCIRB’s pure premium rate recommendation is approved as filed, the average Jan. 1, 2009, pure premium rate will be $1.95 per $100 of payroll, compared to the average Jan. 1, 2007, pure premium rate of $1.96. That rate is approximately 60 percent below the average pre-reform pure premium rate of $4.81, WCIRB said.

The recommended 16 percent increase does not reflect the cost impact of the recent changes to the Permanent Disability Rating Schedule (PDRS) proposed by the Division of Workers’ Compensation, the association said. If the PDRS changes are adopted, WCIRB indicated it will pursue an additional 3.7 percent pure premium rate increase.

The WCIRB said it expects to submit its filing to the California Department of Insurance on Aug. 15, 2008. Once submitted to the CDI, the filing and related documents will be available in the Regulatory Filings section of the WCIRB Web site at www.wcirbonline.org.