Commissioner Lara issues new, lower workers’ compensation benchmark rate
News: 2024 Press Release
SACRAMENTO, Calif. — Insurance Commissioner Ricardo Lara today adopted and issued a new and decreased rate for workers’ compensation insurance that reflects California’s growing economy. The Commissioner’s action lowers the annual benchmark rate from currently $1.41 to $1.38 per $100 of payroll for workers’ compensation insurance — representing a 2.1 percent decrease from last year — which will go into effect on September 1, 2024.
Key factors in the Commissioner’s decision include the continuing decrease in the number of medical services associated with each workers’ compensation claim, and a continuing decline in the percentage of claims with permanent disability benefits. After considering the healthy state of the workers’ compensation market, overall economic conditions, and his staff’s actuarial projections concerning long-term and short-term trends, Commissioner Lara concluded that a reduction in the average pure premium rate is reasonable and appropriate at this time.
The Workers’ Compensation Insurance Rating Bureau of California’s (WCIRB) September 1, 2024 Pure Premium Rate Filing includes COVID-19 experience in the portion of the projection that is developed from accident year 2023. Beginning with accident year 2023, COVID-19 experience will no longer be excluded from consideration when setting rates. In addition, the Commissioner notes the concerns raised by the WCIRB and Bickmore, the WCIRB Governing Committee public members’ actuary, regarding recent large increases in litigation and other claim expenses, and looks forward to the WCIRB further investigating potential causes for these cost increases.
Commissioner Lara’s decision results in an average advisory pure premium rate that is below the $1.42 average rate proposed by the WCIRB in its filing with the California Department of Insurance. Commissioner Lara issued today’s advisory rate after a virtual public hearing held on June 6, 2024, and careful review of the testimony and evidence submitted by stakeholders.
The Commissioner’s recommended rate is based on insurance companies’ cost data, trends, and recommendations made to him by the Department’s workers’ compensation experts. The pure premium rate is only advisory, as the Commissioner does not have statutory rate setting authority over workers’ compensation rates. The average advisory pure premium rate level of $1.38 approved by the Commissioner is about 21.1 percent lower than the industry-filed average pure premium rate of $1.75 as of January 1, 2024.
# # #
Media note:
- Decision and Order of Insurance Commissioner Ricardo Lara implementing workers’ compensation claims cost benchmark and advisory pure premium rates.
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 www.insurance.ca.gov 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.
