CA Insurance Commissioner Approved Workers Comp Rate Increase
The CA Insurance Commissioner Approved Workers Comp Rate Increase a few weeks ago. The recommendation from the CA rating bureau, WCIRB would have sharply increased the advisory rate by over 12%. The Commissioner cut the recommended rate by 1/2. The final increase of advisory pure premium rates was 6.6%.
See the article on the WCIRB covering CT (Cumulative Trauma) claims.
Why would CA Insurance Commissioner Lara reduce the recommended advisory insurance by 50%? Let us look at the decision. You can find it here.
The full document consists of 19 pages of analysis. As in many states, the advisory rates do not have to be followed exactly. I decided to hold the article to see what effect the decisions would have on the upcoming policy renewals.
From the CA Insurance Commissioner’s Decision –
The pure premium rate process does not reflect an employer’s final charged insurance rate or premium. Instead, the pure premium process is narrowly tailored to project a specific sub-component of an overall rate. For example, the pure premium rate does not include the costs associated with underwriting expenses, profit, or a return on an insurer’s investments. The analysis of pure premium in California projects the cost of benefits and LAE for the upcoming policy period beginning September 1, 2026.
Pure premium rates alone do not determine an individual employer’s insurance premium. An employer’s premium may fluctuate greatly from these figures based upon the classification of an employer’s business, the mix of employees and operations, and the employer’s actual claims experience.
Bottom Line
One of the main questions that everyone asks is: How does a 6.6% advisory rate increase affect the CA Workers.. Comp system? Think of the recommended CA Insurance Commissioner Approved advisory pure premium rates as more of an influence than an order. Rates are likely going to increase. The above bolded paragraph covers it well.
