Digital tablet with profit and tables on screen, calculator, financial reports on wooden desk.
Digital tablet with profit and tables on screen, calculator, financial reports on wooden desk.

The organization that helps set workers’ compensation rates in California will recommend that benchmark rates increase 0.9%, with effect from Sept. 1, 2024.

While the recommendation is less than 1%, the Workers’ Compensation Insurance Rating Bureau noted that it was driven by increasing medical costs for injured workers and higher claims-adjusting costs for insurers.

The Rating Bureau’s governing committee approved the rate change recommendation, which will be sent to the state insurance commissioner, who can either approve it or order another rate adjustment.

If history is any guide, it’s likely that Commissioner Ricardo Lara won’t approve the rate hike and will instead recommend a lower increase or even a reduction, as he did last year and the year before.

In 2023, the Rating Bureau had recommended a rate increase of 0.3% in the average benchmark rate (also known as the pure premium rate), and the commissioner instead ordered that it be cut by 2.6%.

The pure premium rate includes only the cost of claims and claims-adjusting costs, and does not take into account other forms of overhead and profits. Each of the 500 class codes has its own pure premium rate, which insurers use as a guidepost for pricing their policies. They are not obliged to follow the rates.

And while this year’s recommendation is low, some policyholders may see higher rate increases or rate reductions, depending on their industry, their claims history and X-Mod, and location.

The tiny rate-increase recommendation is based on continuing downward pressure on claims costs since last year. Drivers of the Rating Bureau’s recommendation include:

  • Lower claims cost inflation
  • Lower frequency of claims
  • Lower overall claims costs
  • Higher medical costs
  • HIgher claims-adjusting costs.


Decision expected this summer

Commissioner Lara will hold a public hearing on the recommendation in the coming months, after which he will issue a decision to approve the filing or set another rate. We’ll keep you posted at the time.

If you have questions about your workers’ compensation coverage, please call us anytime.

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