California commissioner approves 8.7% rate increase, first since 2015

The workers compensation pure premium advisory rate will increase 8.7%, effective Sept. 1, the first rate hike in California since the start of 2015.

The Workers’ Compensation Insurance Rating Bureau on Monday announced that the insurance commissioner approved an advisory pure premium rate of $1.52 per $100 of payroll.

The WCIRB recommended an 11.2% increase, $1.56 per $100 of payroll, citing increases in medical loss development and medical costs in 2024, increasing frequency and a related increase in allocated loss adjustment expenses.

The bureau, in announcing the rate hike and publishing the commissioner’s decision, said the difference between its recommended rate and the rate approved by the department is due to different assumptions about loss development.

Insurance Department actuary Serina Wu wrote that this “increase is primarily attributed to higher projected medical loss development for more recent accident years, driven by continued growth in the cost of medical services — including physical medicine, rehabilitation and medical-legal services — which typically occur within the initial years following a claim.”

At the same time, indemnity loss ratios for the same accident years were essentially flat.

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