California’s Workers’ Compensation Insurance Rating Bureau has submitted its January 1, 2012 Pure Premium Rate Filing to the California Department of Insurance (CDI) containing pure premium rates proposed to be effective January 1, 2012.
The average of the 494 classification pure premium rates proposed in the filing is $2.33 per $100 of payroll. This average proposed pure premium rate is 1.8% less than the corresponding average of insurer filed pure premium rates of $2.37 as of July 1, 2011.
These pure premium rates represent the anticipated cost of losses and loss adjustment expenses expected to be incurred on policies incepting on or after January 1, 2012.
In prior filings, the WCIRB proposed rates that were benchmarked to the approved pure premium rates; however, this has led to a misunderstanding among the public that a change in the approved pure premium rates will have a direct and commensurate impact on the rates filed and charged by insurers. In order to mitigate this misunderstanding and provide more meaningful information regarding insurer rates, the pure premium rates proposed in this filing are benchmarked to the average insurer filed pure premium rate and additional information regarding industry average filed and charged rates is provided in the WCIRB’s filing.
While 2012 projected cost levels remain below their pre-reform highs and the proposed average pure premium rate is slightly less than the industry average filed pure premium rate, the proposed pure premium rates reflect significant deterioration in projected losses and loss adjustment expenses as well as less optimistic economic forecasts as compared to one year ago. The deterioration in losses and loss adjustment expenses is primarily attributable to (a) a significant increase in projected allocated loss adjustment expenses, (b) continued adverse loss development on recent accident years, and (c) increased claim frequency on the 2010 accident year.
Source: Workers’ Compensation Insurance Rating Bureau.
Topics California
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