Flash Report: 2021 Rates Are Out: Lara Rejects COVID-19 Surcharge

In a stunning blow to the Bureau and a major victory for California’s employers Insurance Commissioner Ricardo Lara issued the 2021 pure premium advisory rates. There is an 8.6 overall average difference between what the Bureau recommended and what Lara approved. He is rejecting the Bureau’s filing for a COVID-19 surcharge on all employers – no matter their exposure. 


The decision is a 4.6% overall rate cut. It is the tenth straight for California employers since the Baker SB 863 workers’ comp reforms took hold in 2015. 


The Commissioner’s decision is mostly in line with the rate recommendation of independent actuary Mark Priven’s numbers. He represents the employer members of the Bureau’s Governing Board Absent the COVID-19 surcharge. The WCIRB was recommending a 1% rate cut.


The Bureau is a private organization with quasi-governmental responsibility. It is financially supported exclusively by insurance carriers in whose interests it operates. 


Compline is inserting the new rates in its systems, including its premium rater over the long weekend.


In rejecting the Bureau’s proposal, Commissioner Lara cited the lack of reliable data for adjusting the cost of the COVID-19 claims. The Commissioner suggests carriers may create and file COVID charges, but he orders them to identify these adjustments in filings. Additionally, Lara is ordering the Bureau to collect data on the aggregate amount of additional premium charged for a COVID-19 adjustment. 


Carriers have the option to pick what business to write and how to factor in existing credits and debits. 


The Commissioner’s decision to reject a specific surcharge mirrors other jurisdictions’ actions in not adding a specific load for COVID-19 claims. Employers, labor, and the State Compensation Insurance Fund submitted testimony against the Bureau’s proposal, noting that it would be inherently unfair to small employers that are not covered by the state’s COVID-19 presumption.