Sacramento, CA – Insurance Commissioner Dave Jones recently adopted and issued a revised advisory pure premium rate, lowering the benchmark to $1.63 per $100 of payroll for workers’ compensation insurance, effective January 1, 2019. Commissioner Jones has reduced the advisory pure premium rate by about 42 percent since January 2015 when the Commissioner approved an average pure premium rate that was $2.81 per $100 of payroll.
With an average filed pure premium rate of $2.13 per $100 of payroll as of July 1, 2018, insurers were on average applying pure premium rates that were approximately 19.7 percent more than the corresponding average advisory pure premium rate of $1.78 approved by the commissioner as of that date.
The indicated advisory pure premium rate level of $1.63 approved by the Commissioner today is about 23.5 percent lower than the industry filed average pure premium rate of $2.13 as of July 1, 2018.
“Savings for workers’ compensation insurers continue and all of those savings ought to be shared with employers,” said Insurance Commissioner Dave Jones. “Cost savings in the workers’ compensation system have helped insurers and employers deserve to share in the cost savings through lower premiums. I renew my call on workers’ compensation insurers to pass along savings to employers.”
Commissioner Jones’ decision results in an advisory pure premium rate that is below the $1.70 average rate recommended by the Workers’ Compensation Insurance Rating Bureau (WCIRB) in its filing. Jones issued the advisory rate after a public hearing and careful review of the testimony and evidence submitted by stakeholders. The pure premium rate is only advisory, as the Legislature has not given the commissioner rate authority over workers’ compensation rates.
The WCIRB’s pure premium advisory rate filing demonstrated continued decreases in costs in California’s workers’ compensation insurance market. The pure premium advisory rate reduction is based on insurers’ cost data through June 30 of this year. Insurers’ net costs in the workers’ compensation system continue to decline as a result of SB 863, SB 1160, and AB 1244 enacted by the Legislature and Governor Jerry Brown. The WCIRB notes continued favorable medical loss development including acceleration in claim settlement.
Source: CA DOI