Workers’ Comp Rates Headed Up Again

Workers’ Compensation insurance rates will be going up in 2014. Insurance Commissioner Dave Jones adopted an advisory average pure premium rate of $2.70 per $100 of employer payroll for workers compensation rates effective January 1, 2014.

The adopted amount is a nickel lower than that proposed by the Workers’ Compensation Insurance Rating Bureau of California’s (WCIRB). The WCIRB’s proposed advisory average rate was $2.75 per $100 of payroll. The WCIRB’s proposed advisory average pure premium rate is 8.7% ($2.75 per $100 of payroll) above the industry’s average filed rates as of July 1, 2013 and the Commissioner’s adopted pure premium rate ($2.70 per $100 of payroll) is 6.7% above the industry’s average filed rates as of July 1, 2013.

Commissioner Jones, the WCIRB and the public members’ actuary all said publically that they agree that the overall impact of SB 863 (2012) continues to result in savings for the workers’ compensation system. The California Department of Insurance continues to observe that medical and indemnity losses are outpacing wage growth and consequently, the average advisory pure premium will increase in 2014.

All of this is “advisory” because insurers’ prices can’t be controlled by the state, but they do pay attention to the commissioner’s findings because he has control over regulation of their industry. Things like the industry involved, an individual company’s experience modification ratio and other considerations go into setting actual rates.
For example, the Commissioner approved a number of changes to the workers’ compensation regulations contained in the California Workers’ Compensation Uniform Statistical Reporting Plan – 1995 (USRP), the California Workers’ Compensation Experience Rating Plan – 1995 (ERP) and the Miscellaneous Regulations for the Recording and Reporting of Data – 1995 (Miscellaneous Regs) over the past two years.

All proposed changes to the thresholds for dual wage classifications were approved with the exception of the thresholds for Classifications 5190/5140, Electrical Wiring – within buildings, Classifications 5183(1)/5187(1), Plumbing – shop and outside, and Classifications 5538/5542, Sheet Metal Work – erection, installation or repair.

The commissioner’s decision, the approved January 1, 2013 pure premium rates and other information related to the filing and decision may be downloaded from the Regulatory Filings section of the WCIRB website, . For information concerning the approved changes to the USRP, ERP and Miscellaneous Regs, see the WCIRB Quick Reference Guide 2013 on the site.

The WCIRB anticipates issuing the vast majority of first quarter 2014 experience modifications by mid-December. Any inquiries to WCIRB Customer Service regarding the issuance of 2014 experience modifications will not be processed until after that date.