Calif. insurance commissioner recommends 2.8% workers comp rate increase

California Insurance Commissioner Dave Jones recommended workers compensation insurers raise their pure premium rates by an average of 2.8% beginning Jan. 1, 2013./ California Department of Insurance

California Insurance Commissioner Dave Jones recommended workers compensation insurers raise their pure premium rates by an average of 2.8% beginning Jan. 1.

The commissioner made the announcement on Friday and warned that it would be folly to overestimate savings potentially derived from recently adopted reform legislation, especially when insurers are paying out 116% more in claims than they are collecting in premiums.

"This is a case where the math matters and actuarial science is the critical component in determining a rate that will maintain insurers' ability to pay claims," the commissioner said in a statement. "We cannot afford to set the pure premium rate based on overestimates of the potential reform savings that S.B. 863 will bring when insurers are already paying out more in claims than they are collecting in premiums."

Senate Bill 863 provided for increasing permanent disability benefits for injured workers, which previously were inadequate, the commissioner said. It also called for implementing system reforms, especially for changing the way medical treatment is delivered and paid for.