Calif. Workers’ Comp Rating Bureau Could Recommend 40% Rate Increase

The Workers’ Compensation Insurance Rating Bureau of California is discussing a pure premium rate increase of up to 40 percent at today’s Governing Committee meeting, according to industry reports.

The WCIRB Actuarial Committee met on April 1 to review insurer experience valued as of Dec. 31, 2010, and noted that its analysis showed there is significant pure premium rate inadequacy. Pure premium rates have not been adjusted since Jan. 1, 2009, it noted.

A final indicated change is not yet available, but the Actuarial Committee’s review of insurers’ experience “shows a deterioration of more than 10 percentage points since the WCIRB’s Jan. 1, 2011, filing, which recommended an increase in pure premium rates of 27.7 percent,” WCIRB said. However, some industry insiders say those numbers are skewed because they include figures from the California State Compensation Insurance Fund, which has some claims with a very long tail.

Nevertheless, WCIRB said insurers’ experience deterioration is primarily due to increased losses, claims frequency, loss optimistic forecasts of statewide wage level growth, and increased levels of allocated loss adjustment expense that are likely, in part, attributable to the 2009 Ogilvie and Almaraz/Guzman decisions that addressed permanent disability awards.

The WCIRB Governing Committee, which is meeting today, is considering the Actuarial Committee’s analysis and will decide whether to authorize the WCIRB to make a July 1, 2011 pure premium rate filing to increase rates. The Commissioner then can decide whether to adopt the WCIRB’s recommendation — something previous insurance commissioners have not done in some time.

Topics California Trends Workers' Compensation Pricing Trends