California Commissioner Lowers Workers’ Comp Pure Premium

May 22, 2017

California Insurance Commissioner Dave Jones issued a revised advisory pure premium rate, lowering the benchmark to $2.02 per $100 of payroll for workers’ compensation insurance effective July 1.

This is 16.5 percent less than the average pure premium rate of $2.42 California insurers filed as of Jan. 1.

Jones adopted the Workers’ Compensation Insurance Rating Bureau’s recommendation to lower the advisory pure premium rate mid-year. His adoption is only advisory. The commissioner has no rate authority over workers’ comp.

“A reduction in the pure premium rate reflects a reduction in the cost to insurers of providing workers’ compensation insurance, which benefits California’s business economy if insurers lower their pricing,” Jones said in a statement. “However, there is no legal requirement that these insurers pass these cost savings onto employers, so workers’ compensation insurers continue to file pure premium rates that are higher than the pure premium rate warranted by their costs.”

The mid-year pure premium advisory rate reduction is based on insurers’ cost data indicating workers’ comp insurers’ medical costs were lower in 2016. The WCIRB claims the downward medical loss development is in part driven by continued acceleration in claim settlement, decreasing indemnity claim frequency, and lower than projected loss adjustment expenses.

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