California’s WCIRB Pure Premium Rate Increase- Surprising?
When the WCIRB pure premium rate increase was announced, words such as “shocking,” “unexpected,” and “surprising” appeared in the press releases. Yes, the 11.2% increase across the board appears large. Let us look at the justification for the WCIRB pure premium rate increase to see what drove those numbers.
Correction – Before the increase can be approved, Commissioner Lara will hold a hearing on June 10, 2025. See the notice here.
Thanks to CWCI for pointing that out. See their email at the bottom of this post.
The 11.2% number appears large when compared to the recommendations of most other rating bureaus (NCCI, PCRB, NCRB, etc.), which have suggested only small increases recently. Why was there a different assessment from other rating bureaus?
California Insurance Commissioner Lara will hold a hearing pproved the recommended increase. The numbers will go live on 09/01/2025
Looking At The Numbers
The WCIRB always publishes a report full of charts and a webinar on the current Workers Comp environment at least quarterly. The on-demand webinar, which covers the subject well, can be found here on the bureau’s website, or you may watch it below. The two actuaries presented for 3o minutes and then answered questions for 30 minutes.
The above video covers many topics. I wanted to cover the charts they used during the presentation with my own take on the numbers. Check out my next article for a deep dive into the numbers. I do agree that the pure premium rates required some type of adjustment upward. The 11.2% increase seemed to be a little much.
Before we look at some of the “telling charts”, please keep in mind that no California insurance carrier requirements exist for having to follow the WCIRB pure premium rates. Each WC carrier has to have their rates approved by the Insurance Commissioner. I do not remember the CA Insurance Commissioner ever rejecting a filed rate unless a mistake was made in the filing.
Example Chart – WCIRB Pure Premium Rate Report
I decided to include the charts in the next article except for the next example. This chart that you can find on this webpage shows a very short increase in ALAE rates. ALAE – Allocated Loss Adjustment expenses that do not go directly into the Experience Mod Calculation.
The sharp increase since 2016 means that the cost to the carrier of adjusting the claim results in the ALAE severity rising. – ALAE costs are Attorney Fees, Independent Medical Exams (IMEs), Med-Legal reviews and other cost factors that are not charged to the Experience Mod.
The next article will cover more of the charts that would explain the heavy WCIRB pure premium rate increase recommendation made by the WCIRB
Comment from CWCI – Thanks for the correction.
Hello Mr. Moore:
I read your blog post on the recent Calif WC rate filing proposing an 11.2% increase in pure premium rates submitted to the Dept. of Insurance by the Calif Workers’ Compensation Insurance Rating Bureau. Your post indicated that Insurance Commissioner Lara has approved the increase and it will take effect September 1.
That is not the case. The commissioner has scheduled a hearing to consider the proposed rate increase for next Thursday (June 10) at 1 pm (Pacific). We will have to wait to see what he does with the latest filing, though he has rejected five previous increases in the advisory pure premium rates proposed by the WCIRB. If approved, the rate hike would be the first in a decade. The link to the announcement of the hearing is:
https://www.wcirb.com/sites/default/files/2025-05/ppr_-_reg-2025-00007_-_notice_of_proposed_action_public_hearing_re_sept_1_2025_work_comp_claims_cost_benchmark_advisory_pure_premium_rates_5-9-25.pdf
Regards, Bob Young, Communications Director, California Workers’ Compensation Institute (CWCI)
