California Workers’ Comp Committee Votes for Lower Mid-Year Filing

The governing committee of the California Workers’ Compensation Insurance Rating Bureau voted unanimously in early April to authorize the WCIRB to submit a mid-year pure premium rate reduction filing to the California Department of Insurance

The filing will propose a July 1 average advisory pure premium rate of $2.30 per $100 of payroll, which is 10.4 percent lower than the corresponding industry average filed pure premium rate of $2.57 as of Jan. 1 and 5.0 percent less than the insurance commissioner’s approved average Jan. 1 advisory pure premium rate of $2.42.

The governing committee’s decision was based on the WCIRB actuarial committee’s analysis of insurer loss and loss adjustment experience as of Dec. 31, 2015, which was reviewed at public meetings of the actuarial committee held on March 22 and April 5.

The actuarial committee noted that allocated loss adjustment expense in the post-workers’ comp reform environment is emerging higher than projected and the count of liens increased sharply in 2015.

Cumulative trauma claims continue to increase, particularly in the Los Angeles region, according to the committee.

Despite these upward pressures on system costs, the governing committee believed that lower frequency, lower medical severity and favorable loss development warranted a reduction in the industry average pure premium rate as of July 1.