WCIRB to Propose 16.0% Increase for Jan. 1

California's WCIRB Governing Committee has authorized the WCIRB to submit a filing to the California Department of Insurance (CDI) recommending a 16.0% increase in pure premium rates effective Jan. 1, 2009.

The recommended increase in pure premium rates relies upon similar methodologies used in the WCIRB's Jan. 1, 2008 pure premium rate filing and is based on insurer loss and loss adjustment expense experience valued as of March 31, 2008. Approximately 10.8% of the recommended increase is due to increasing medical costs, 2.8% is due to increased loss adjustment expenses, and 1.8% is due to the annual adjustment to the experience rating off-balance correction factor.

If the WCIRB's pure premium rate recommendation is approved as filed, the average Jan. 1, 2009 pure premium rate will be $1.95 per $100 of payroll, comparable to the average Jan. 1, 2007 pure premium rate of $1.96 and approximately 60% below the average pre-reform pure premium rate of $4.81.

The recommended 16.0% increase in pure premium rates does not reflect the cost impact of the recent changes to the Permanent Disability Rating Schedule (PDRS) proposed by the Division of Workers' Compensation. If the DWC proposed changes to the PDRS are adopted, the WCIRB will amend its recommendation by proposing that (1) the Jan. 1, 2009 pure premium rates be increased by an additional 3.7% and (2) the approved 2008 pure premium rates applicable to the unexpired portion of 2008 policies also be increased by 3.7%.

The WCIRB filing will be submitted to the CDI on or around Friday, Aug. 15, 2008. Once submitted to the CDI, the filing and related documents will be available in the Regulatory Filings section of the WCIRB Web site.