April 15, 2025 | MedLegalNews.com – WCIRB Proposes 11.2% Hike in advisory pure premium rates, citing rising claims costs and changing industry dynamics. The California Department of Insurance (CDI) will review the recommendation in an upcoming public hearing.
What Is Changing and Why It Matters
The pure premium rate serves as a benchmark for insurers, representing the expected costs of claims per $100 of payroll—excluding operational expenses and profit margins. The WCIRB now recommends raising this benchmark from $1.47 to $1.63, effective later this year.
This marks a notable shift in California’s workers’ compensation environment. According to the WCIRB, escalating medical and indemnity expenses, increased cumulative trauma claims, and higher litigation rates in certain regions have driven the proposed change.
Trends Driving the Recommendation
The WCIRB identified several key factors influencing the recommendation:
- Medical inflation is putting pressure on claims costs.
- Cumulative trauma claims are rising, particularly in densely populated areas.
- Litigation surrounding workers’ compensation claims has become more frequent.
Consequently, these trends have forced actuaries to adjust expectations, suggesting that current rate levels may no longer adequately reflect claim realities.
Implications for Employers
Employers across the state are watching closely, as the proposed increase could significantly raise their insurance premiums. Many small businesses already feel squeezed by rising labor costs and inflation. WCIRB Proposes 11.2% Hike, if adopted, could add further financial strain.
“California businesses are working hard to stay afloat,” said one employer advocate. “We urge regulators to balance fiscal responsibility with fair coverage.”
What’s Next?
The CDI will hold a public hearing in late May to assess the proposal. During this session, stakeholders may offer input or challenge the WCIRB’s actuarial assumptions.
Following the hearing, Insurance Commissioner Ricardo Lara will decide whether to accept the proposal, modify it, or reject it altogether. This decision will likely shape rate-setting for insurers across the state.
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📌 Source: WCIRB Official Announcement