Flash Report: WCIRB Approves Amending COVID-19 Surcharge

The Workers’ Compensation Insurance Rating Bureau’s governing committee just approved amending the January 2021, pure premium rate filing. It is recommending the application of a six-tier surcharge for COVID-19 costs to next year’s advisory rates.

The surcharge will range from 1 cent to 24 cents depending on the industry’s relative share of the COVID-19 claims filed to date (see chart below). Overall, the surcharge adds 4.1% to a rate indication which would be another rate cut for the system if not for the COVID-19 add-on.

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

The committee rejected a motion by State Compensation Insurance Fund President Vern Steiner to eliminate the surcharge entirely and allow carriers to handle the COVID-19 issues via scheduled rating. He maintained that proposed load punishes the sector hardest hit by the economic fallout from the pandemic – small employers. The motion failed due to the lack of a second by either the insurer or the public members on the committee.

Instead, the committee approved on a 10-1 vote amending the filing to apply surcharges of 1 cent, 3 cents, 6 cents, 12 cents, 18 cents and 24 cents. The surcharge in many cases amounts to a roughly 30% increase over the indicated rate without a specific surcharge. An amended filing is expected by early next week.

The Bureau earlier said it would not apply COVID claims towards experience mods, however the application of a surcharge hits every California employer instead of only those affected with the illness.

IndustryGroupCOVID-19 Surcharge
55 - Management of Companies and Enterprises10.01
51 - Information10.01
54 - Professional, Scientific, and Technical Services10.01
8742 - Outside Sales20.03
52 - Finance and Insurance20.03
8810 - Clerical20.03
21- Mining, Quarrying, and Oil and Gas Extraction20.03
71 - Arts, Entertainment, and Recreation20.03
53 - Real Estate and Rental and Leasing20.03
56 - Administrative Support and Waste Mgmt and Remediation Services30.06
42 - Wholesale Trade30.06
23 - Construction30.06
61 - Educational Services30.06
31 - Manufacturing30.06
22 - Utilities 30.06
81 - Other Services (except Public Administration)30.06
92- Public Administration40.12
44 - Retail Trade40.12
48- Transportation and Warehousing40.12
Physicians, Dentists, and Daycare40.12
72 - Accommodation and Food Services50.18
11 - Agriculture, Forestry, Fishing and Hunting50.18
62 - Healthcare and Social Assistance (excluding Physicians, Dentists, and Daycare)60.24