California may lower workers’ compensation pure premium rates for the seventh time in a row. The California Workers’ Compensation Insurance Rating Bureau’s (WCRIB) governing committee submitted a mid-year pure premium rate that is 7.2 percent lower than the approved average rate that began in January of 2018.

The mid-year filing will propose rates, beginning in July 1, 2018, to average $1.80 per $100 of payroll. The January 1, 2018 advisory pure premium rate was $1.94 per $100 of payroll, 19 percent less than the industry average of $2.22 per $100 of payroll filed at the same time.

If this new rate is approved that will mark an average drop of more than 35 percent since their January 1^st 2015 advisory pure premium rates.

WCRIB attributes the reductions to Senate Bill 863, which was implemented in 2013 and was meant to streamline the workers’ comp system and lower costs in part by utilizing independent medical reviews (IMR) to resolve disputes, reducing the volume of liens and decreasing the instance of spinal surgeries. Senate Bill 1160, enacted January 1, 2017 also likely played a part in lien reduction by requiring the California Department of Insurance (CDI) to stay liens of providers who have been indicted or charged with crimes. Recently The Department of Industrial Regulation reported they have dismissed 292,000 illegitimate liens. Dave Bellusci, executive vice president and chief actuary for WCRIB said that a formulary for prescription drugs in comp may reduce pharmacy costs by an estimated 10 percent, which equates to about a half-a-point reduction in their pure premium recommendation.

Cumulative injury claims in the state have increased, especially in the Los Angeles region. Medical severities have also started to increased, and these are certainly trends that WCRIB is watching. The state will also have a new governor, insurance commissioner and director of the Department of Industrial Relations coming into office soon, which may impact reforms in the system.

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