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California's WCIRB to propose midyear advisory pure premium rate decrease

The insurer and public governing committee members of the Workers'Compensation Insurance Rating Bureau of California on April 6 voted unanimouslyto authorize the bureau to submit a midyear pure premium rate filing to the CaliforniaDepartment of Insurance.

The bureau's filing will propose a July 1 average advisory purepremium rate of $2.30 per $100 of payroll, which is 10.4% lower than the correspondingindustry average filed pure premium rate of $2.57 as of Jan. 1 and 5.0% less thanthe insurance commissioner's approvedaverage Jan. 1 advisory pure premium rate of $2.42.

The committee's decision was based on the analysis by the bureau'sactuarial committee of insurer loss and loss adjustment experience as of Dec. 31,2015. The actuarial committee noted that allocated loss adjustment expense appearsto be moving higher than projected and the count of liens increased sharply in 2015.In addition, cumulative trauma claims continue to increase, particularly in theLos Angeles region.

Despite the upward pressures on system costs, the governing committeebelieved that lower frequency, lower medical severity and favorable loss developmentwarranted a reduction in the industry average pure premium rate as of July 1.

The bureau anticipates submitting its filing to the insurancedepartment by April 11.