The insurer-controlled governing committee of the Workers’ Compensation Insurance Rating Bureau just concluded its September 1, 2024, rate filing deliberations. It voted to file for a 0.9% increase in the advisory pure premium rates. Officials say the increase is driven primarily by increased loss development for medical costs and higher loss adjustment expenses.
Recent statistics prove California’s workers’ comp carriers are making a substantial underwriting profit on workers’ comp. It remains California’s most competitive commercial insurance product.
The committee voted 8-3 to approve the request for a 0.9% increase despite opposition from the public members representing employers and organized labor. The public members backed an alternative proposal developed by their actuary for a 3.3% decrease in the rates, but the insurer majority rejected the proposal (see chart). The differences in the recommendations are driven by long-standing differences in loss development methodologies between the public actuary and the Bureau’s more pessimistic outlook for loss severities going forward.
Last year, the Bureau filed for a 0.3% increase, but Insurance Commissioner Ricardo Lara denied the request and ordered a 2.6% rate decrease. The Commissioner has consistently pushed back against the Bureau’s rate increases while carriers have consistently reduced charged rates. Given the industry’s profitability and the Commissioner’s history, the prospects for an increase look unlikely.
The Bureau is a private organization with quasi-governmental responsibility. It is financially supported exclusively by insurance carriers in whose interests it operates.
Workers’ Comp Executive will have in-depth coverage of the actuarial data and the deliberations leading to the rate filing in our next premium edition.
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