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Rating Bureau Rates Have Little Effect on Policies


Rating Bureau Rates – Worrying About Nothing – See Why

Over the last two weeks, many articles have appeared on the WC blogosphere where a public actuary disagreed with the California Rate Bureau (WCIRB) over rate decreases versus rate increases.  I have been writing articles since 2008 on why the Rating Bureau rates debate means little to the final policy premiums paid by employers.   Let us look at why.

pic child worried about rating bureau rates
Public Use License – Filipa Machado

Simple Main Reason

One can call them Loss Cost Multipliers, Deviated Rates, Filed Rates, and many other terms that mean the same thing.  How do these rates work?  Each carrier in each state in which it writes Workers Comp coverage confers with its underwriting and actuarial departments for projections on what policy rates will result in some type of profit.

If the pure premium rates or base rates are not sufficient for the carrier to operate in the state, the carrier will adjust the rates up or down depending on the desired level of profit and marketability of that rate.

The large carriers may have 50 or more different subsidiary carriers that may all file their own deviations from the recommended rates.

The final figures are then filed with each state’s Insurance Commissioner.  These rates will differ from the rating bureau rates by sometimes up to 250% such as with one carrier in CA that will remain nameless.

Rating Bureau Rates vs Filed Rates

For example here is the link to the CA Carrier Published Filed P&C Rates. 

Most of the time, the Insurance Commissioner’s office will approve the LCMs “as filed” with very few refusals.   The LCMs may allow each classification code to deviate a certain percentage from the rating bureau rates.  The carriers may also do a blanket increase or decrease (usually increase)for all classification codes from the rating bureau rates.

Below is a passage from CA Insurance Commissioner Lara’s press release: (example from 2022)

The recommended rate is based on insurance companies’ cost data. The pure premium rate is only advisory, as the State Legislature has not given the Commissioner rate setting authority over workers’ compensation rates. The average advisory pure premium rate level of $1.45 approved by the Commissioner is about 18 percent lower than the industry-filed average pure premium rate of $1.77 as of January 1, 2022.





James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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