Moore: Premium Increase Not so Shocking

Wednesday, June 4, 2025 | 0

When the Workers' Compensation Insurance Rating Bureau of California's pure premium rate increase was announced, words such as “shocking,” “unexpected” and “surprising” appeared in the press releases.

James Moore

Yes, the 11.2% increase across the board appears large. Let us look at the justification for the WCIRB pure premium rate increase to see what drove those numbers.

The 11.2% number does appear large when most other rating bureaus have recommended only small increases recently. Why was there a different assessment from other rating bureaus?

California Insurance Commissioner Ricardo Lara approved the recommended increase. The numbers will go live on Sept. 1.

Looking at the numbers

The WCIRB always publishes a report full of charts and a webinar on the current workers' comp environment at least quarterly. The on-demand webinar, which covers the subject well, can be found here. The two actuaries presented for 30 minutes and then answered questions for 30 minutes.

I do agree that the pure premium rates required some type of adjustment upward, but the 11.2% increase seemed to be a little much.

Please keep in mind that no California insurance carrier requirements exist for having to follow the WCIRB pure premium rates. Each carrier has to have its rates approved by the commissioner. I do not remember the commissioner ever rejecting a filed rate unless a mistake was made in the filing.

A sharp increase in allocated loss adjustment expenses since 2016 means that the cost to the carrier of adjusting the claim results is rising. ALAE costs are attorney fees, independent medical exams, med-legal reviews and other factors that are not charged to the experience mod.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.