Workers’ compensation insurers advised to reduce rates to reflect decreasing costs

“The continued decreases in costs to insurers should be passed along to employers through lower rates,” said Insurance Commissioner Dave Jones.

SACRAMENTO, Calif. – Insurance Commissioner Dave Jones adopted and issued a revised advisory pure premium rate, lowering the benchmark to $1.94 per $100 of payroll for workers’ compensation insurance, effective January 1, 2018. This is 17.1 percent less than the average pure premium rate of $2.34 California insurers filed as of July 1, 2017.

Commissioner Jones’ decision results in an advisory pure premium rate that is slightly below the $1.96 average rate recommended by the Workers’ Compensation Insurance Rating Bureau (WCIRB) in its filing. Jones issued the advisory pure premium rate three weeks after a public hearing and careful review of the testimony and evidence submitted. His adoption is only advisory, as the commissioner has no rate authority over workers’ compensation insurers.

“The continued decreases in costs to insurers should be passed along to employers through lower rates,” said Insurance Commissioner Dave Jones. “The WCIRB has once again recommended a reduction in the advisory pure premium rate, which will ultimately benefit California’s business economy if insurers lower their pricing.”

The WCIRB’s pure premium advisory rate filing demonstrated continued decreases in costs in California’s workers’ compensation insurance market. The pure premium advisory rate reduction is based on insurers’ cost data through June 30 of this year. Insurers’ net costs in the workers’ compensation system continue to decline as a result of SB 863, SB 1160, and AB 1244 enacted by the Legislature and Governor Brown. The WCIRB notes continued favorable medical loss development including acceleration in claim settlement.

The WCIRB will evaluate workers’ compensation insurance costs again in the summer and fall of next year when it files its pure premium rate benchmark recommendation with the Department of Insurance. That filing will provide an opportunity to assess whether medical costs continue to be lower and what changes, if any, there are in other costs in the system.


The commissioner has the authority to regulate auto, home, and property insurance rates and has saved consumers and businesses $2.6 billion in rates by rejecting excessive rates or rate increases for those lines of insurance, but the Legislature has not given the commissioner the authority to regulate workers’ compensation rates. Workers’ compensation insurance rates are not set by the Department of Insurance. Under California law, workers’ compensation insurers set their own rates.

The purpose of the pure premium benchmark rate process is to review costs in the workers’ compensation insurance system and to confirm that rates filed by insurance companies are adequate to cover benefits for injured workers.


Leave a Reply