Author, Jack Marrs, Associate Account Executive, Human Services Group, Rancho Mesa Insurance Services, Inc.

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) voted to submit a September 1, 2022 Pure Premium Rate Filing to California’s Insurance Commissioner Lara.

The filing will suggest a 7.6% average rate increase above last year’s approved September 1, 2021 pure premium rates.

There are multiple reasons for the WCIRB’s Governing Committee to suggest the rate increase. Most notably,

• There is an 11% projected increase to indemnity claim cost by the end of 2024.

• The industry predicts a 6.5% increase in medical costs per claim from 12/31/21 to 12/31/24.

• We expect increases in frequency of injuries and claims.

• Wage inflation will increase claim cost and the cost to adjust claims.

• Expected future costs of COVID-19 claims are likely to increase, which were previously excluded when underwriting considers claims history.

Before the increase goes into effect, the WCIRB will submit a proposal to the Department of Insurance. Insurance Commissioner Lara will decide to either approve the rate increase, or reject it and suggest a different outcome.

Although the commissioner cannot mandate any sort of rate increase or decrease, it is common for workers’ compensation carriers to cooperate with his recommendation and follow his lead.

This news is another sign that the California workers’ compensation insurance market may be hardening. With that in mind, it is crucial that employers are implementing trainings and safety programs to ensure workplace safety.

In addition, a strong broker partner must truly understand the clients’ industry, operations, and service needs.

Please contact Rancho Mesa to understand how to better prepare for an increase in claims costs and the hardening workers’ compensation marketplace.