California Workers’ Compensation Rates Under Review
California businesses may soon see their workers’ compensation insurance rates rise. On June 7, the Workers Compensation Insurance Rating Bureau (WCIRB) hosted a hearing to discuss updates to rates.
At the beginning of 2021, the rate was $1.45 per $100 of payroll. The rating board, which evaluates trends in claims to determine the appropriate rate, recommended $1.50 for $100, a 2.7% increase.
Mark Priven, the public actuary who represents organized labor and advises the commissioner while working for the Bickmore risk management firm, recommended lowering the rate to $1.34. This would be nearly 20 cents lower than the current benchmark, and less than half the $2.50 rate set in 2015 in California.
Rating bureau CEO Bill Mudge said the rates in the competitive market have been going down, but the question is, how long will they last?
According to Mudge, “(Carriers) may choose to just be competitive. But if carriers feel like they’re having to recover those costs, they may raise the rates — unless they’re just going to be competitive.” Nationally, workers’ compensation is valued at $55 billion.
The factors cited for the suggested increase in rates include costs associated with medical-legal and primary care services. The effects of COVID-19 on the workplace were not considered.
California Insurance Commissioner Ricardo Lara will be reviewing rates recommended by WCIRB and has promised to be on the lookout for changes or challenges to the marketplace.
Lara said, “With the pandemic continuing to create uncertainty for the near future, we need to continue to review the data along with the impact of both vaccine distribution and additional and necessary public health measures to bend the curve.” He added that he’s, “not persuaded that there is sufficient and reliable data upon which to base an adjustment for COVID-19 costs.”
In response to COVID the bureau is adding a new worker classification — remote worker. Industry insiders believe the remote working trend is here to stay and agree this has created a major shift in how employees work.
It remains to be seen, however, how the new class of workers will affect rates.