Reduced Workers' Comp Rates
California Insurance Commissioner Dave Jones on May 7, 2015, approved a 10.2% reduction to the advisory pure premium rate that will go into effect on July 1, 2015.
The commissioner adopted an advisory pure premium rate of $2.46 per $100 of payroll, 10.2% less than the $2.74 he adopted for policies inception on or after Jan. 1. The adopted rate is 5% less than the industry average filed pure premium rate of $2.59.
The WCIRB in April recommended the lower rates based on favorable loss developments last year. The rating bureau projected a 7.7% increase in medical severity for 2014, but preliminary data found medical costs dropped 4.1%. At the same time, indemnity severity was down 5.4% in 2014 while the Rating Bureau was expecting a 9.6% increase.
Savings from favorable medical and indemnity severity trends were partially offset by higher allocated loss-adjustment expenses, which increased 12.1% in 2014, less than the projected 2% decrease.
Jones said in his order the state is realizing medical savings that were expected with the independent medical-review process created by Senate Bill 863. "Due to delays in the IMR process, however, we are uncertain whether indications will hold up in the long term," he said.
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