The Workers’ Compensation Insurance Rating Bureau’s governing carriers rejected the public members call for an 8% rate cut and approved filing for a lesser 5.7% cut in California’s 2020 pure premium rates. The choice comes against a backdrop of record profits for California’s workers’ comp carriers. The vote was 8 to 3. All carrier members voted for the lower cut, and all public members voted for the larger decrease.
The Bureau is a quasi-private organization with governmental responsibility. It is financially supported exclusively by insurance carriers in whose interests it operates.
The public member’s actuary, Mark Priven, noted that in projecting the trend only the latest year of the experience is showing any significant increase and it is the most leveraged. “I think both projections for severity are a bit high,” he says of the Bureau’s recommended trends.
The Bureau’s recommendation includes two extra points of reduction from the mid-year rate filing that its insurer members blocked for July 1, 2019 policies. The Bureau is a private organization with quasi-governmental responsibility. It is financially supported exclusively by insurance carriers in whose interests it operates.
Driving down both the public and the Bureau’s rate indication is a continuation of the themes following the adoption of the Baker workers’ comp reforms. The reforms have brought down rates by over 40% — now more – since they started falling in 2015. Downward loss development is continuing but at a more moderate pace than in recent years. Claims settlements, however, continue to accelerate while pharmaceutical costs continue to fall. So too with liens which are at their lowest level in years.
With all the positive news in the data WCIRB actuary, Dave Bellusci told the committee that “No turnaround is imminent.” That being said, there are still areas of concern, including the continued high cost for administering claims in California and an uptick in both medical and indemnity severities.
Bureau officials expect to make a formal filing in the coming days. The filing will be the first made to embattled Insurance Commissioner Ricardo Lara. It will be interesting to see how the Department responds to the two recommendations.