Today, the California Insurance Commissioner issued a Decision regarding the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) January 1, 2021 Pure Premium Rate Filing (Filing), which was originally submitted to the California Department of Insurance (CDI) on August 26, 2020, and amended on September 15, 2020. The WCIRB proposed advisory pure premium rates in both its original and amended filings that average $1.56 per $100 of payroll, which was 2.6 percent above the average of the January 1, 2020 approved advisory pure premium rates. The CDI held a public hearing regarding the Filing on October 5, 2020. The CDI’s official hearing record closed on October 26, 2020.
In his Decision, dated November 24, 2020, the Insurance Commissioner approved advisory pure premium rates that average $1.45 per $100 of payroll. The average approved 2021 advisory pure premium rate, which does not reflect a provision for projected COVID-19 claim costs, is 4.6 percent below the average approved January 1, 2020 advisory pure premium rate. The approved January 1, 2021 advisory pure premium rates differ from the WCIRB’s proposed pure premium rates, which averaged $1.50 per $100 of payroll excluding the provision for COVID-19 claim costs. The difference between the WCIRB proposed and CDI approved advisory pure premium rates is due to somewhat different assumptions regarding medical loss development and future claim severity trends.
While the Insurance Commissioner’s approved advisory pure premium rates do not reflect a provision for projected COVID-19 claim costs on 2021 policies, his Decision indicated that, “[i]nsurance companies are encouraged to take under advisement the actuarial analyses provided in the proposed decision as well as ongoing developments when evaluating whether and to what extent an adjustment for the costs of COVID-19 should be incorporated into a given insurer’s rate filing.” The CDI’s Proposed Decision includes a Table of Recommended COVID-19 Additive Adjustment per $100 of Payroll that average $0.05 per $100 of payroll. The Table from the Proposed Decision was not adopted by the Commissioner in his Order.
The Commissioner’s Decision also directed insurers to clearly identify any filed rate or rating plan component that includes an adjustment for COVID-19 in rate filings submitted to the CDI. Finally, the Insurance Commissioner directed the WCIRB to collect data on the aggregate premium charged for any rate or rating plan component that includes an adjustment for COVID-19.
The Insurance Commissioner’s Decision and electronic files containing the approved January 1, 2021 advisory pure premium rates may be downloaded from the Filings and Plans section of the WCIRB website.1 Additionally, a Table of CDI Proposed Decision COVID-19 Additive Adjustment per $100 of Payroll – Not Approved by Insurance Commissioner by classification developed based on the Table included in the CDI Proposed Decision that was not adopted by the Insurance Commissioner is also available on the WCIRB website for informational purposes. The WCRATE file with the abbreviated class wording will also be available for download in this section by next week.
Insurance Commissioner’s Decision
California Department of Insurance Proposed Decision and Order
Bulletin 2020-27 WCIRB January 1, 2021 Pure Premium Rate Filing Decision
Amended January 1, 2021 Pure Premium Rate Filing (September 15, 2020)
Original January 1, 2021 Pure Premium Rate Filing (August 26, 2020)
2021 Advisory Pure Premium Rates: XLS File | Delimited File
Table of COVID-19 Additive Adjustments by Classification from CDI Proposed Decision – Not Approved by Insurance Commissioner
1 The advisory pure premium rates underlying the WCIRB’s filing but excluding the additive adjustments for COVID-19 claim costs as well as a table of proposed COVID-19 additive adjustments by classification from the WCIRB’s filing are also posted on the WCIRB website.