California Insurance Commissioner Dave Jones today announced that the Workers’ Compensation Insurance Rating Bureau (WCIRB) has proceeded with his directive to revise its filing of pure premium rates in order to provide more meaningful and understandable information regarding insurer rates and underlying cost drivers in the workers’ compensation system.
The Commissioner has directed the WCIRB to benchmark its proposed pure premium rates against the average insurer filed pure premium rates rather than the previously approved pure premium rates. In this way, the proposed pure premium rate change is more indicative of cost levels reflected in the most currently available average insurer pricing levels. Also, it is believed that by presenting the information in the manner prescribed by the Commissioner, the public will be able to better understand the key factors affecting costs and premium rates.
“This new and improved system will allow for a greater level of transparency in the process used to set workers’ compensation insurance rates, while also increasing the public’s awareness and understanding of this issue,” Commissioner Jones said.
Historically, the WCIRB analyzes and submits its recommendations for pure premium rates that do not include information on current insurer filed pure premium rates. This process has led to a misunderstanding by the public that a change in the approved pure premium rates will have severe impact on the rates filed and charged by insurers.
However, the methodologies utilized by the WCIRB will not change as a result of the Commissioner’s directive. But in order to comply with the Commissioner’s directive, the manner in which the information is presented in future WCIRB pure premium rate filings shall analyze average insurer filed and charged rates as well as the impact of underlying system costs on pure premium rates rather than the advisory pure premium rates.
Source: California Department of Insurance.
Was this article valuable?
Here are more articles you may enjoy.