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Insurance Commissioner Lara lowers workers’ compensation benchmark rate, further protecting workers and businesses during pandemic

News: 2021 Press Release

For Release: July 21, 2021
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Insurance Commissioner Lara lowers workers’ compensation benchmark rate, further protecting workers and businesses during pandemic

SACRAMENTO, Calif. — Today, Insurance Commissioner Ricardo Lara adopted and issued lower rates for workers’ compensation insurance as businesses continue to recover from the COVID-19 pandemic and rehire workers — reducing the benchmark rate by $.05 to $1.41 per $100 of payroll for workers’ compensation insurance, effective September 1, 2021.

Last year, Commissioner Lara resisted calls to add a COVID-19 surcharge to employers’ rates, citing uncertainty over the impact of the pandemic on future workers’ compensation claims and costs. The surcharge would have especially affected employers of farm workers, health care workers, grocery workers, and other front-line workers. With workers’ compensation claims related to COVID-19 now falling amid the vaccine rollout and public health actions, this year’s pure premium rates again do not include a pandemic factor.

“Reducing workers’ compensation rates will continue to assist our state’s recovery as many businesses reopen and rehire,” said Commissioner Lara. “I believe protecting our essential businesses and their workers from increased costs was the right thing to do last year. With the vaccine rollout, public health measures, and emergency rules that I approved since the start of this pandemic in order to reduce costs for businesses, it is still the right thing to do today. Insurance companies must continue to be cautious and be guided by data as we recover from this hopefully once-in-a-lifetime pandemic.”

Commissioner Lara issued emergency rules in June 2020 allowing businesses to reduce costs for workers whose duties changed to lower-risk classifications or were furloughed due to the pandemic. The rules will expire this summer following the end of the statewide stay at home order on June 11, 2021.

Commissioner Lara’s decision results in an average advisory pure premium rate that is below the $1.50 average rate recommended by the Workers' Compensation Insurance Rating Bureau of California (WCIRB) in its filing with the Department of Insurance. Commissioner Lara issued today’s advisory rate after a public hearing that he convened on June 7, 2021 and careful review of the testimony and evidence submitted by stakeholders.

The recommended rate reduction is based on insurance companies’ cost data. The pure premium rate is only advisory, as the State Legislature has not given the Commissioner rate setting authority over workers’ compensation rates. The newly approved average advisory pure premium rate level of $1.41 approved by the Commissioner is about 24.2 percent lower than the industry-filed average pure premium rate of $1.86 as of January 1, 2021.

This marks the eleventh consecutive reduction to the average advisory pure premium rate benchmark since January 2015.

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Media notes:

  • Decision and order of Insurance Commissioner Ricardo Lara implementing workers’ compensation claims cost benchmark and advisory pure premium rates (July 21, 2021)

Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.

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