San Francisco, CA – The insurer and public members of the WCIRB’s Governing Committee unanimously voted to authorize the WCIRB to make a January 1, 2013 Pure Premium Rate Filing recommending, among other things, an average advisory pure premium rate of $2.68 per $100 of payroll, which is 12.6% above the average industry filed pure premium rate as of July 1, 2012 of $2.38. The recommendation is subject to revision pending a review of workers’ compensation reform proposals under consideration in Sacramento and a review of June 30, 2012 loss experience once it becomes available.
The Committee was acting on the WCIRB Actuarial Committee’s review of loss and loss adjustment experience projections based on March 31, 2012 data. (See August 2, 2012 Actuarial Committee Meeting Summary.) The WCIRB will submit its January 1, 2013 Pure Premium Rate Filing to the California Department of Insurance (CDI) on or around August 21, 2012.
The indicated January 1, 2013 average advisory pure premium rate of $2.68 represents an approximate 10% deterioration in experience from the WCIRB’s July 1, 2012 indication. The deterioration is attributable to continued adverse loss development, elevated indemnity claim frequency, an increase in the projection of future loss inflation, an increase in allocated loss adjustment expense and lower wage growth forecasts.
The indicated average pure premium rate to be reflected in the Filing does not include the impact of proposed workers’ compensation reform legislation under consideration in Sacramento. In the coming weeks, WCIRB staff and the Actuarial Committee will review the legislation and evaluate its impact on system costs. Similarly, the WCIRB will review June 30, 2012 insurer loss experience once it becomes available. If appropriate, the WCIRB will amend its Filing based on these reviews.
The Governing Committee also accepted several Classification and Rating Committee recommendations including the adoption of the WCIRB’s Comprehensive Evaluation of California’s Dual Wage Classifications draft report, proposed increases in the wage thresholds for several dual wage classifications, proposed changes to the experience rating plan credibilities and a proposed January 1, 2014 change to the Physical Audit Requirements contained in the California Workers’ Compensation Uniform Statistical Reporting Plan – 1995. (See July 31, 2012 Classification and Rating Committee Meeting Summary). These recommendations will be included in the Filing.
The Filing and all related documents will be available in the Regulatory Filings section of the WCIRB website (www.wcirbonline.org) and the WCIRB will issue a WCIRB Wire Story once the Filing has been submitted to the CDI.
Source: CA WCIRB