Workers’ compensation insurers advised to reduce rates to reflect decreasing costs
News: 2017 Press Release
Commissioner Jones' decision results in an advisory pure premium rate that is slightly below the $1.96 average rate recommended by the Workers' Compensation Insurance Rating Bureau (WCIRB) in its filing. Jones issued the advisory pure premium rate three weeks after a public hearing and careful review of the testimony and evidence submitted. His adoption is only advisory, as the commissioner has no rate authority over workers' compensation insurers.
"The continued decreases in costs to insurers should be passed along to employers through lower rates," said Insurance Commissioner Dave Jones. "Workers' compensation reform legislation should require that system cost savings be passed onto employers in the form of lower rates-- the law does not require this currently."
The WCIRB's pure premium advisory rate filing demonstrated continued decreases in costs in California's workers' compensation insurance market. The pure premium advisory rate reduction is based on insurers' cost data through June 30 of this year. Insurers' net costs in the workers' compensation system continue to decline as a result of SB 863, SB 1160, and AB 1244 enacted by the Legislature and Governor Brown. The WCIRB notes continued favorable medical loss development including acceleration in claim settlement.
The WCIRB will evaluate workers' compensation insurance costs again in the summer and fall of next year when it files its pure premium rate benchmark recommendation with the Department of Insurance. That filing will provide an opportunity to assess whether medical costs continue to be lower and what changes, if any, there are in other costs in the system.
- The commissioner has the authority to regulate auto, home, and property insurance rates and has saved consumers and businesses $2.6 billion in rates by rejecting excessive rates or rate increases for those lines of insurance, but the Legislature has not given the commissioner the authority to regulate workers' compensation rates. Workers' compensation insurance rates are not set by the Department of Insurance. Under California law, workers' compensation insurers set their own rates.
- The purpose of the pure premium benchmark rate process is to review costs in the workers' compensation insurance system and to confirm that rates filed by insurance companies are adequate to cover benefits for injured workers.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.