The California Workers’ Compensation Insurance Rating Bureau Governing Committee voted on Wednesday to authorize the WCIRB to submit a mid-year pure premium rate filing to the California Department of Insurance that’s 5 percent lower than the Jan. 1 filing.
The committee cited lower medical loss development, as well as indemnity and medical severities that continue to be below expectations, for the reduction.
The filing will propose a July 1 advisory pure premium rate of $2.46 per $100 of payroll, which is 5 percent lower than the corresponding industry average filed pure premium rate of $2.59 as of Jan. 1 and 10.2 percent less than the approved average Jan. advisory pure premium rate of $2.74.
“While loss adjustment expenses continue to emerge at levels higher than expected, those higher costs are more than offset by better than projected loss experience,” a release from the WCIRB stated.
According to the committee, the primary drivers of the reduction in pure premium rates are:
- Significant improvement in medical loss development since the WCIRB’s amended Jan. 1 pure premium rate filing, which decreases the estimates of ultimate historical accident year loss ratios and the resultant future year medical cost projections.
- Continued decline in the average cost of indemnity and medical on indemnity claims — particularly in the 2014 accident year. For the second consecutive year following the implementation of California’s workers’ comp reform bill, Senate Bill 863, medical severities declined by more than 4 percent.
- Significant improvement in accident year 2014 experience, in large part driven by lower than expected severity growth.
The WCIRB anticipates submitting its filing to the CDI by April 6.