San Francisco, CA – The CA WCIRB has submitted a July 1, 2012 Pure Premium Rate Filing (Filing) to the California Department of Insurance (CDI) recommending an increase in advisory pure premium rates effective July 1, 2012. The advisory pure premium rates proposed for the 494 standard classifications currently in effect average $2.51, which is 4.1% more than the corresponding industry average filed pure premium rate of $2.41 as of January 1, 2012.
The advisory pure premium rates contained in the Filing represent the anticipated cost of losses and loss adjustment expenses expected to be incurred on policies incepting on or after July 1, 2012. Insurers may, and often do, file and use rates other than the advisory pure premium rates proposed by the WCIRB or the advisory pure premium rates approved by the Insurance Commissioner.
System Costs Continue to Escalate
The proposed change in advisory pure premium rates is the result of continued adverse loss development on recent accident years as paid indemnity and paid medical loss development continues to deteriorate. Other factors contributing to the indicated increase include: (1) the continued growth in allocated loss adjustment expense (ALAE) per claim, which the WCIRB believes is largely the result of an increased volume of liens and increases in litigation related to permanent disability claims, (2) increased levels of indemnity claim frequency on the 2010 and 2011 accident years that is in part attributable to an increase in cumulative injury claims, and (3) the sluggish pace of California’s economic recovery and the reductions in the economic forecasts of future wage inflation for 2012 and 2013 which place upward pressure on advisory pure premium rates.
Additional detail concerning these cost drivers is contained in the Executive Summary of the Filing. The Filing and all related information may be viewed, printed and downloaded from the Regulatory Filings section of the WCIRB website.
The CDI will conduct a public hearing on the matters contained in the WCIRB’s Filing. Once the date, time and location of the hearing are set, the WCIRB will add that information to its website.