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SACRAMENTO—California Insurance Commissioner Dave Jones on Friday approved a workers compensation advisory pure premium rate filing of $2.30 per $100 of employer payroll effective Jan. 1, 2012.
The California Workers' Compensation Insurance Rating Bureau had requested a pure premium rate of $2.33 per $100 of payroll.
The WCIRB reviews pure premiums to assure that rates filed by insurers are adequate to fund workers comp benefits and adjustment expenses during the next year, according to the commissioner's decision.
The San Francisco-based rating bureau now indexes its pure premium rate recommendation to current insurer rate filings and policy pricing, the decision states.
“The WCIRB filing demonstrates that insurers are currently charging premiums that are very close to the estimated cost of providing benefits and adjusting expenses,” the decision also states.
But insurers are discounting their manual rates due to competition, the commissioner said in his decision statement.
“But this discounting must be carefully monitored in light of actual claims costs to ensure rate adequacy,” the statement reads. “For example, at present for every $1 of premium workers compensation insurers collect, they incur $1.26 for claims and expenses. The difference is made up through insurers' investment returns. This is welcome news for employers, since they are not experiencing dramatic increases in workers compensation premiums, yet this phenomenon may not be sustainable without addressing underlying cost pressure.”