Commissioner Lara Approves First Pure Premium Rate Increase in 10 Years

Last Friday afternoon, the California Department of Insurance announced that Commissioner Lara  approved an increase in advisory pure premium rates for new and renewal workers’ compensation policies incepting on or after September 1, 2025 – the first increase in a decade. Overall, the approved increases average 8.7%, slightly more than the 8.1% increase recommended in late April by the actuary representing WCIRB’s public members and labor representatives, but below the 11.2% increase that was recommended by insurer members and approved by the WCIRB governing committee for the September 1 rate filing.    

The Bureau’s 11.2% recommended rate hike was prompted by increases in medical loss development, a 12% increase in medical severity in 2024 (including a 14% increase in average payments for inpatient services), and a jump in claim frequency – driven in part by the emergence of cumulative trauma (CT) claims in Northern California and the resulting growth in allocated loss adjustment expenses. The increase in CT claims throughout the state was notable as it coincided with the recent shift to virtual WCAB hearings, which the Bureau said was followed by a 21% increase in the use of Los Angeles applicant attorneys in Bay Area hearings and a 12% increase in the use of Los Angeles applicant attorneys in San Diego hearings. In addition, applicant attorneys have reportedly increased the number of out-of-area claims filed at the Los Angeles and Van Nuys Appeals Boards.

During his tenure, Commissioner Lara rejected five previous requests for workers’ compensation rate increases that the WCIRB had filed. The newly approved advisory pure premium rates average $1.52 per $100 of payroll, up from an average of $1.40 per $100 of payroll approved a year ago.

Advisory pure premium rates serve as benchmarks that insurers can use in setting their own rates. WCIRB’s Report on Insurer Experience valued through the end of 2024 show California workers’ compensation insurers’ average charged rate for policies written in 2024 was $1.61 per $100 of payroll. That was only marginally higher than the average charged rate of $1.60 in policy year (PY) 2023, but after declining steadily for nine years in a row, it was only about half of the average rate of $3.19 per $100 of payroll charged in PY 2014. 

The September 1 rate filing, Commissioner Lara’s decision, and the approved pure premium rates are available in the Regulatory and Pure Premium Rate Filings section of the WCIRB website.

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