CA Workers Comp Board Committee Authorizes Proposed 1.8% Rate Decrease for 2012

The Workers' Compensation Insurance Rating Bureau of California (WCIRB) Governing Committee voted to authorize the WCIRB to file proposed January 1, 2012 pure premium rates. The proposed 2012 pure premium rates will reflect the anticipated cost of losses and loss adjustment expense expected to be incurred on policies incepting on or after January 1, 2012.

Source: Source: WCIRB | Published on August 12, 2011

As directed by the Commissioner, the WCIRB, in its January 1, 2012 filing to be submitted on or about August 19, 2011, will benchmark its proposed pure premium rates to the average insurer filed pure premium rates rather than the current advisory pure premium rates. In addition, the filing will analyze average insurer filed and charged rates as well as the impact of underlying system costs on pure premium rates.

The January 1, 2012 pure premium rates to be proposed by the WCIRB for each of approximately 500 industry classifications are projected to average $2.33 per $100 of payroll. This is 1.8% less than the corresponding average of insurer filed pure premium rates as of July 1, 2011.

While projected cost levels remain below pre-reform levels, the proposed 2012 pure premium rates reflect continued deterioration in experience since the reforms of 2002 through 2004 were fully implemented in 2005.

Specifically, since 2005, the average cost of medical per indemnity claim has increased by 40%, the average cost of indemnity has increased by 31%, and the average cost of allocated loss adjustment expense per indemnity claim has increased by 55%. ??The WCIRB's filing and related materials will be available in the Regulatory Filings section of the WCIRB website once it is submitted to the California Department of Insurance on or about August 19, 2011.